Is this illegal?

[Zeze]

Let's say I was diagnosed with cancer today. But I just passed a test that cleared me from having one 2 weeks ago.

Can I sign up for life insurance knowing that I have cancer? (And they won't know.)

My friend's mom is considering doing this. I know nothing about cancer or how life insurance works.

 

[DaTT]

I believe so. But it is something I would do.

 

[BUTCH1]

There may be clauses and limitations for the first 1-2 years of the policy, just like when someone wants flood insurance 2 days before a huge storm happens the policy has a 30 day hold on any claims filed during this period.

 

[Jumpem]

The insurance company would probably be able to deny a payout on a claim based on a falsified application.

And as a helpful hint to the rest of you $500k-1m of life insurance is relatively cheap, so sign up for it while young and in good health. Think about some long term disability as well.

 

[MrChad]

Many life insurance policies require that you take a medical exam as part of the application process.

 

[Rastus]

If you lie on your insurance application, that is fraud. You would not only be denied any claims, you would also be prosecuted.

 

[Old Hippie]

Forget about it.

 

[Zeze]

Hmm.. what if she signed up for the insurance 2 months prior to the cancer diagnosis? As in, she truly didn't know. (But now she's looking to buff up her insurance for bigger payout).

 

[Modelworks]

If the claim is a large one the insurance companies can and usually will request all medical records before paying out to determine when you knew about the condition.

 

[sactoking]

Illegal? No. Insurance is a contract between two private parties so only civil remedies are available.

Immoral? Yes. She'd be lying and attempting to steal.

Material misrepresentation? Yes. The policy would be voided when (not if) she got caught and her premiums would be returned (without interest) and no benefits would be paid.

Fraud? Maybe. When caught she would likely not face civil prosecution though since technically the company can rescind (void) the policy without any harm. No harm, no penalty.

If she tried this, one of three things would happen:
60% chance she gets caught on the underwriting review of her medical records and the policy is rescinded.
39.9% chance she gets caught on the payout review when she dies and the policy is either rescinded (if she dies of cancer) or re-rated (if she does not die of cancer).
0.1% chance she gets away with it.

If she did not know she had cancer, applied for insurance, and then found out the next day that she did nothing would happen since, at the time of application, she was still a statistical probability and not a certainty.

 

[911paramedic]

There's usually a grace period, so if it comes up later that she was diagnosed with something within "x" amount of days/weeks/months after the policy went into effect, it isn't going to be covered.

 

[Zeze]

Thanks guys! I will advise them so.

 

[FoBoT]

insurance fraud? illegal?
http://en.wikipedia.org/wiki/Insurance_fraud
"Insurance fraud is any act committed with the intent to fraudulently obtain payment from an insurer."

 

[PieIsAwesome]

Why does it matter if its fraud? If a person dies, they will be too dead to be prosecuted.

 

[dud]

Let's say I was diagnosed with cancer today. But I just passed a test that cleared me from having one 2 weeks ago.

Can I sign up for life insurance knowing that I have cancer? (And they won't know.)

My friend's mom is considering doing this. I know nothing about cancer or how life insurance works.

Yes, you can sign up. No, you will most probably NOT succeed at this deception.

My last policy ended 3 years ago and I let it lapse for a year. I decided to try for a $250K policy and was told it would be cheap. It took 4 months and my premiums doubled when the Ins Co. found that I had had cancer ... even though I had been cleared for years.

Yes, you can try this ... from my experience you (or your friend's mom) will ultimately fail in collecting on the policy. The underwriters will ultimately find our that the insured KNEW about the cancer and lied about it ... voiding the policy.

Fail ...

 

[dud]

Why does it matter if its fraud? If a person dies, they will be too dead to be prosecuted.

What the #$%! are you talking about?

It's not about being prosecuted ... its about the probability of being able to collect on the policy. In this case the probability is ZERO once the ins company determines that the insured knew they had caner.

How do you prosecute a deceased person? Give me a break ...

 

[HamburgerBoy]

Why are you all assuming the hypothetical individual is going to die? This is straight up fraud, and anyone committing it deserves a long, painful, cancerous death.

 

[PieIsAwesome]

What the #$%! are you talking about?

It's not about being prosecuted ... its about the probability of being able to collect on the policy. In this case the probability is ZERO once the ins company determines that the insured knew they had caner.

How do you prosecute a deceased person? Give me a break ...

But I'm talking about risks. The worst that can happen is they say "no, no money for you." Prosecution for fraud won't matter if the insured person will either be dead or will soon be dead.

Why are you all assuming the hypothetical individual is going to die? This is straight up fraud, and anyone committing it deserves a long, painful, cancerous death.

Well, that is sort of the idea.

 

[Newbian]

But I'm talking about risks. The worst that can happen is they say "no, no money for you." Prosecution for fraud won't matter if the insured person will either be dead or will soon be dead.

Except for going after your finances if you are still alive or those that helped you.

 

[sactoking]

Except for going after your finances if you are still alive or those that helped you.

Won't happen. In contract law the preferred remedy is reparation of the injury. If the person committed fraud or misrepresentation on the application and it was discovered before the death benefit was paid the insurer would not have suffered any real injury. From the insurer's standpoint the contract could be voided and the insurer would be made whole. As a result, any court would just void the contract and not further penalize the 'insured'.

 

[Newbian]

Won't happen. In contract law the preferred remedy is reparation of the injury. If the person committed fraud or misrepresentation on the application and it was discovered before the death benefit was paid the insurer would not have suffered any real injury. From the insurer's standpoint the contract could be voided and the insurer would be made whole. As a result, any court would just void the contract and not further penalize the 'insured'.

Go perform insurance fraud or help a person do it and see what happens.

 

[sactoking]

Go perform insurance fraud or help a person do it and see what happens.

I know exactly what happens, I work as a regulator. All the "insurance fraud" cases you see in the news have two major, and very important, differences from what is discussed here:
1) They are on a much larger scale. They often involve large groups of people staging accidents, falsifying receipts, working in collusion with doctors, filing against multiple insurers, etc. That's different than a single person, single case.
2) They aren't discovered until after the fact. This is the key difference. Since the preferred remedy for fraud/misrepresentation is rescission, and a policy can't be rescinded if it has already paid, that option is no longer available.

Suffice it to say, fraud is much more difficult to prove than misrepresentation so no state will pursue fraud charges against a small operation. An individual case will just be treated as misrepresentation and the policy will be rescinded, unless it's one of the rare cases where it has already paid.

 

[Dr. Zaus]

I know exactly what happens, I work as a regulator. All the "insurance fraud" cases you see in the news have two major, and very important, differences from what is discussed here:
1) They are on a much larger scale. They often involve large groups of people staging accidents, falsifying receipts, working in collusion with doctors, filing against multiple insurers, etc. That's different than a single person, single case.
2) They aren't discovered until after the fact. This is the key difference. Since the preferred remedy for fraud/misrepresentation is rescission, and a policy can't be rescinded if it has already paid, that option is no longer available.

Suffice it to say, fraud is much more difficult to prove than misrepresentation so no state will pursue fraud charges against a small operation. An individual case will just be treated as misrepresentation and the policy will be rescinded, unless it's one of the rare cases where it has already paid.

Sounds like a resounding "GO FOR IT" OP.

 

[Locut0s]

Illegal? No I doubt it. But I'd be VERY surprised if they managed to get away with it. I'm sure they have fine print in the paperwork you sign that would allow them to fuck you over in such a circumstance. They try to protect their asses at all costs.

 

[richardycc]

if the insurance company's underwriting dept is competent, they will know. If this diagnosis is from any licensed doc or this person is taking any meds for it, it will show up in the attending physicians statements. MIB check, or prescription check.