The life insurance mistake 1.2 million Aussies are making

Pair of glasses and magnifying glass on a desk with insurance paperwork.
More than 1.2 million Australians lie to get cheaper life insurance. (Source: Getty)

One in four - or more than 1.2 million Australians - have lied on their life insurance application to get a cheaper policy, a survey has revealed.

The survey, conducted by comparison website Finder, revealed several hard facts about the fibs many Australians tell in order to get a discount. This included as many as 12 per cent of customers admitting to lying about cigarette use to avoid higher life insurance quotes.

Research also showed one in seven Australians (about 14 per cent), lied about their mental health while one in 10 (9 per cent) didn’t disclose their alcohol consumption on their application.

Eight per cent hid pre-existing health conditions, while a further 7 per cent did not disclose dangerous hobbies - such as participating in extreme sports - to get better quotes.

The research also revealed 3 per cent did not disclose the dangers of their jobs.

Why you shouldn’t lie

Life insurance policies cover the risk of premature death, where a lump sum payment can be made to loved ones in the unfortunate event of one’s passing, however providing false information when making an application can have major ramifications.

Finder insurance expert Gary Hunter advised that honesty was still the best policy when signing up for a life insurance policy.

“Your policy could likely be worthless if the insurer finds out you’ve lied on your application,” Hunter said.

“Even if your insurance company doesn’t discover the truth right away – they will research your history if a claim is made.

“Providing false information to an insurer is fraud and, if discovered, your claim will be denied and your policy voided,” he added.

A man points with a pen to information on a form.
Australians were likely to lie about the state of their mental heath, cigarette use and alcohol consumption. (Source: Getty)

Finder also disclosed that men were more likely than women to lie a on their life insurance application, with 31 per cent of men and 22 per cent of women statistically inclined to do so.

The survey also revealed Victorians were more likely to be untruthful, with as many as 33 per cent more likely to tell a fib to get a discount on a life insurance policy.

Queenslanders on the other hand, turned out to be the most honest, with only 14 per cent lying to get a better life insurance quote, Finder revealed.

2021 v 2022 survey

Last year, Finder revealed that as many as 3.8 million Australians were untruthful on their life insurance applications.

While last year’s numbers appeared to be higher, a Finder spokesperson explained that, this year, their questions targeted respondents who had pre-selected as insurance customers and applied the percentage of that group to the overall number of insurance policy holders in order to improve the accuracy of their research.

Last year, respondents of the survey had the option to self-select as not having insurance as part of the question, therefore the overall percentage of those who responded ‘yes’ represented a proportion of the whole population and was applied to all Australians over 18, the spokesperson explained.

This resulted in a lower overall number in 2022 than in 2021, he said.

“While we strive to produce research that is as accurate as possible, occasionally we will revise our processes to improve integrity,” the spokesperson told Yahoo Finance.

"In both of these surveys, the panel questions were a nationally representative sample of the population, based on age, gender, location and income, as verified by Qualtrics/SAP."

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