Are you curious if what is concealment in insurance? This is a fraud that can bring trouble both to the insurer and the insured. If you successfully obtained life insurance, ensure to keep it. You wouldn’t want to have your insurance be useless after you have paid for the premiums.
With that being said, it is worth noting the things that you need to do and not to do to prevent your policy from getting inactive.
Obviously, it will become inactive if you do not pay for the premiums anymore. Other than that, other mistakes may also threaten your policy. One of which is concealment in insurance, which we will discuss in this post, can lead to the cancellation of your policy. So what is concealment in insurance?
What Concealment In Insurance Is?
This happens when an insured party or applicant withholds or hides any relevant info from the insurer. It usually occurs during the filling of applications when the applicant hides information requested from them. Concealment can also occur even after the activation of a policy when the insured conceals information requested officially, such as when a file is claimed. When we say concealment, this pertains to the act of fraud in insurance.
Although many are tempted to conceal information that may raise their premiums, it can lead to cost savings if they would be upfront. Furthermore, this can also prevent the policy from getting canceled. But take note that you can also commit concealment fraud just by accident. If the insurer is asking questions, it is best to answer them with all honesty. If you are not sure of what to answer, help them in finding out the accurate answer.
Concealment is important in insurance because the insurer won’t be able to make sound financial decisions if the client is hiding relevant information.
The acceptance of policy applications and premiums are based on complex calculations using customer information in determining risk. If the information is missing or incorrect, the calculations will be off. This will then jeopardize the insurance company.
Concealment In Warranty
Policies have stated guarantees in the form of warranties. These are serving as linchpins of insurance policies. Providing false statements would make the plan invalid. The policies are depending on how valid are the warranty statements. In case these are proven wrong, then it can invalidate the whole plan. Warranty is subdivided into two general categories.
#1. Promissory warranties
These are statements made for the future about whether or not it is true. Concealment of the promissory warranty will not invalidate the insurance policy instantly. But it gives the insurer the right to the policy canceled. Furthermore, they may also turn down the claims that you will be making.
#2. Affirmative warranties
These are true statements made during the issuance of the policy. Committing concealment when making an affirmative warranty can invalidate the insurance policy. An example of this is when you did not say the truth when the insurer asks about information applying for a policy. Affirmative warranties can invalidate your policy even if it is discovered later.
Consequences of Committing Concealment
The main consequence of committing concealment is the risk of your policy being canceled or denied your claim. This can be a disaster in times of your need. What’s worse is that you will not receive any reimbursement for the premiums you have made all this time despite the cancellation of your policy or even after they have denied the claims you made. As such, it is best to remain honest with your insurance provider. Here is the approach to the cancellation of insurance policies you need to know.
Imagine paying for your life insurance for how many years with all payments made on time. But, then, you are suffering from an incurable disease, but your treatment is going well. The doctors said that you are going to survive longer than they have anticipated. However, when you get your diagnosis, you choose not to tell the insurance company.
After you died from the disease and your dependents filed a claim with the life insurance company, they will deny the payout if they find out the cause of your death since you withheld your incurable disease from them. In such a scenario, it can be seen how committing concealment in insurance can be a significant mistake. Therefore, attach here is the concealment in an insurance contract for you to be aware of.
It’s A Wrap!
Again, to answer the question: what is concealment in insurance? This is when you withhold any information that the insurer required. This is a form of insurance fraud. The consequences include cancellation of your policy and your claims getting denied.
So it is best to be honest and upfront with your insurance provider to avoid committing this insurance fraud by accident. Remember that if you conceal anything from your life insurance provider, you place yourself and your dependents in jeopardy. So, click here to know how do insurance companies work for you to understand it more comprehensively.
That is because you are risking your plan to be canceled and your claims denied when you need it. Even though it means you have to pay higher premiums, it is still, to be honest, so that they can keep your coverage ready for the time that you will need it. For more insurance articles, click here on who has the authority to make changes to insurance. Thank you for reading!