Common Examples Of Life Insurance FraudThe majority of individuals who take out a life insurance policy do so with the intent of using the policy to protect their loved ones in the event of their death. Unfortunately there's another group of people who secure a policy with the intent to defraud the life insurance company. Although this type of life insurance fraud costs insurance companies handsomely each year, it also raises the premiums for everyone.
There are several different types of death insurance fraud and each presents its own host of complications for insurance companies. One type of insurance fraud centers around an individual taking out a large policy and then death occurs shortly after. This is more common in cases where a no-medical insurance policy is in effect. Someone who is suffering from a life threatening illness secures the insurance and then passes away before the initial waiting period is up. In some of these cases, the beneficiaries have sued and have won an insurance settlement. In other cases the individual dies shortly after the waiting period has passed, again raising the suspicion of the insurance company. Another type of life insurance scam that is becoming increasingly popular is in the case of a missing person. Generally this type of insurance fraud begins with the individual securing one or more high paying policies. After the waiting period on each policy has lapsed, the person goes missing. The authorities are contacted and a missing person report is filed. In some locales it can take up to seven years to declare a missing period dead, which means the beneficiary has to wait that long to obtain the proceeds of the policy. However many people have taken suit against life insurance companies to have that time limit reduced. If the death appears to be part of an elaborate accident, such as a car falling in a river or an explosion, the person may be declared sooner. With this particular type of death insurance fraud, the insured is obviously still alive. Murders do occur and are at times connected to life insurance policies. Life insurance fraud that involved someone obtaining a policy in the name of another through the use of forgery happens as well. In this case the insured has no idea that their life is insured for a large amount. After their murder, the beneficiary tries to claim the proceeds from the policy. In many of these types of cases, the proceeds are frozen until a police investigation into the murder has been completed. Again, the beneficiary can sue and if a judge believes they weren't responsible for the death, an insurance settlement may be reached. The majority of the population will never take part in any type of life insurance fraud, but it does happen. Unfortunately, the few who do participate drive up the cost of premiums for everyone. |