Five Shocking Examples of Life Insurance Claims Fraud
Over the course of 30 years of representing the beneficiaries of life insurance claims and hundreds of life insurance lawsuits I’ve seen a lot of life insurance claims fraud carried out by people who seem to always think they’ve planned the perfect crime.
I’m no longer surprised at how creative people are when they’re committing crimes. But, as has been said many times: In life you can’t get away from your past because it’s always right behind you.
Stealing from a big insurance company may seem like it’s not a big deal since, after all, they have lots of money. But even attempting to steal from a life insurance company is a crime known as life insurance fraud.
I’m often asked anecdotally to share some of the more shocking examples of the life insurance claims fraud I’ve encountered. In response I’ve written out a few of them here.
Five shocking examples of life insurance claims fraud
Married Man Dies in Fiery Car Accident… for 7 Years.
An Arizona man supposedly died in a fiery car crash late one night while driving through the desert on his way to California. The problem was that no body was ever found. The man, in his 30’s, was married and a father of 2 young children.
His family believed he was dead and after 7 years petitioned a Court to declare him legally dead. The Court granted. The widow filed an $800,000.00 life insurance claim and was awarded the money. During those 7 years, however, the insured’s conscience got the best of him and he started anonymously contacting family members, especially his father. The anonymous person informed the father that “his deceased son” was gay and had been living a lie as a married father. The supposed-to-be-dead man’s identity was exposed and in an unrelated matter it came to the attention of the life insurance company. The insurer investigated and ultimately uncovered proof that the insured had been living with his gay lover in southern California the whole time. The insurer sued him for insurance fraud and also sued the family for the return of $800k.
Unbelievable Bad Luck.
A man living in the Mid-West bought life insurance on his unemployed 17-year old son. Not long after, the son was found shot and burned in the back seat of a car. A few years later the same man bought life insurance on his on-again off-again girlfriend. Not long after, the girlfriend was found shot and burned in the back seat of car. The chances of this happening to the same person must certainly be…astronomical. Unsurprisingly, the man claimed to have no knowledge of anything and he was just a victim of bad luck. Where he sits today he has lots of time to think about it.
I Swear That’s My Dead Uncle.
A popular scheme of life insurance claims fraud a few years ago was to buy a life insurance policy on someone while they were visiting the US, but who lived in a foreign country. After the person returned to their home country a family member would report them as dead and file a death claim. The insured typically lived in a country which had poor record keeping for death records. The claimants would send handwritten death certificates to the insurance company along with pictures of a dead person they claimed proved the person was dead. Haiti and Jamaica were especially popular for this effort.
In one scam, for no particular reason a Virginia man bought a $1 million life insurance policy on his uncle while the uncle was visiting from Haiti. Very shortly after the uncle returned to Haiti he died in car accident. The nephew sent the insurer photos of a dead person in a coffin, a handwritten death certificate with no official seal, and a claim for $1 million. Quickly the insurance company confirmed there were no hospital records for anyone by that name who was in an accident that day, there was no police report for an accident, and no official office could confirm the identity of the supposed decedent. But that guy in the photo sure looked dead.
Oops, I Probably Should Have Looked Into That Before I Killed Him.
Prosecutors said a woman was nearing financial ruin after running up tens of thousands of dollars in debt when she asked her then-17-year-old daughter and the daughter’s boyfriend to find someone to kill her husband so she could collect his life insurance money. But a police investigation found that the woman’s scheme had a glaring problem from the outset. Her husband had not changed the named beneficiary on his life insurance policy from his ex-wife’s name to his current wife’s name when he was killed. So, it was the ex-wife who received the money.
The daughter testified at trial that her mother told her: “No one would believe I would hire a bunch of kids to kill someone when I know people that could.”
How Not To Buy Life Insurance Online
A clever group targeted a life insurance company that sells its policies online. The group found elderly people, got their personal information and bought large life insurance policies on them… without their knowledge. They made themselves the beneficiaries and payors with the intent of paying premiums for a short period of time until the person died and they’d then collect large sums from the policy proceeds.
The creative con artists used online applications to apply for insurance policies but failed to realize that every input they made on the application was recorded in the insurer’s server. So, when they attempted to complete an application on the same insured 17 times, things looked a little suspicious to the insurance company. Likewise, their repeated practice of getting policy approval and then immediately changing the policy address to their own before it was mailed out caught the attention of the insurer.
The insurance company being accosted was able to read the number of attempted submissions on an individual application and (of course) identify the ip address used to submit the applications. It didn’t turn out well for these bandits.
A lot is said about life insurance companies taking advantage of people. But the reality is it cuts both ways.
The Center for Life Insurance Disputes
1-888-428-4868
By: Stephen C. Burgess
@Copyright May 16, 2023