Life insurance customers often pay higher premiums if they are smokers or participate in risky sports like sky diving or stock car racing. Of course, that also means that some people try to conceal such activities from insurers, inviting the prospect of cancelled policies or denied claims.
One textbook example of this situation is a person who claims on a life insurance application not to be a smoker, but who ends up dying of an illness that was demonstrably caused by smoking. In such instances, loved ones may find themselves unable to collect all or some of a policy's benefits.
And in an age of online social media, people are being warned to be more attentive than ever about the information they share about themselves.
According to a report from CBS MarketWatch.com, there has been a small but growing trend within the insurance industry to see if prospective and present life insurance customers are misrepresenting their risk factors based on the information and pictures they post online.
While it remains to be seen how widespread this trend will become, life insurance customers should remember that they now have more reasons than ever to be truthful at all times about their activities and habits when applying for a new policy.