What happens if an applicant for life insurance submits an application that contains false information?

When an applicant for life insurance submits an application containing false information, the insurer may void the policy. This is due to the principle of "insurable interest" and the requirement for applicants to provide accurate information. Insurance relies on the principle of utmost good faith (uberrima fides), which mandates that both parties disclose all relevant facts honestly. If an applicant misrepresents material facts—information that would influence the insurer's decision to issue coverage or the terms under which it is offered—the insurer can declare the policy void.

The misleading information can severely impact the insurer's assessment of risk, leading to the potential for significant financial loss if a claim is made based on the false application. Therefore, the insurer protects itself by having the right to void the policy if it is determined that the false information is material to the underwriting process.

In contrast, the other options are not valid outcomes of submitting a false insurance application. The insurer retains the right to deny coverage if the application contains false information, so there is no automatic approval of coverage. Similarly, an applicant would not receive a lower premium based on false information; rather, the premium is calculated based on accurate risk assessments reflecting true and honest disclosures.