Life insurance rescission is something that you want to avoid at all costs. What is it? It’s a legal action where your life insurance contract is declared void or canceled. This can happen if you lie or misrepresent material information on you life insurance application that directly affects your mortality and actuarial probabilities, such as lying about your age, tobacco-use or a pre-existing medical condition.

So when applying for life insurance, don’t leave anything out. By misrepresenting important information about your health and lifestyle, you risk leaving your family without the benefits of your policy when you die. For example, if you tell a life insurance carrier that you’re in prefect health, when in fact, you had a heart palpitation two years ago, that carrier can and will seek a rescission of your life insurance policy, leaving you uninsured and your family unprotected.

Following are two ways to avoid life insurance rescission:

1. Understand the difference between warranty and representation –A warranty is a promise or guarantee that a piece of information given is true. If a statement is not true, your life insurance company has the right to rescind the contract. Alternatively, a representation is a statement made by you that is relevant to the formation of the contract. Untrue Representations will cancel the contract.
2. Know your timeline – Life insurance carriers have up to two years after a contract was signed to identify a misrepresentation that occurred during the underwriting process. If a misrepresentation is recognized within two years, the carrier will rescind your life insurance policy.

The moral of the story is that you should not lie or misrepresent any information on your life insurance application. By lying, you risk leaving your family unprotected when you die. If you’re concerned about paying a higher premium due to a medical condition, don’t be. Cheap life insurance is easy to find. Talk to a licensed life insurance agent at a multi-carrier brokerage firm. They can compare underwriting guidelines among top-rated life insurance companies and give you a free term life insurance quote based on your individual circumstances. The most important thing to remember is that having some term life insurance is better than having no coverage at all.