(this has now has been published in PI Magazine. We encourage all professional investigators to subscribe to PI Magazine - www.PIMagazine.com)
In our world of Equivocal Death Investigations, we are often tasked with bringing closure to families in the loss of a loved one (see www.UnderstandingDeathInvestigations.com). This may include the unasked question of life insurance benefits. This is because many life insurance policies have double indemnity clause – or payment of twice the policy benefits if the death is ruled an accident. Conversely, many life insurance policies have a clause that denies benefits if the death is ruled a suicide. These may also have clauses that, in the event of benefits, the terms are limited – for example a suicide two or more years after a policy is written is payable. Similarly, there are issues of survivor and workers’ compensation benefits in the event of accidents and death. These are all very important, and often unrealized, issues when families may need the expertise of our services and legal counsel.
The insurance industry proactively fights fraud, including with specific clauses and pre-settlement investigations of benefits. One area of fraud that has garnered limited attention is obtaining an insurance policy – life, accidental death and dismemberment, disability, etc. – without the consent and knowledge of the insured. In all states the insured must have knowledge and give written consent to being insured. This includes by a spouse, significant other, next of kin, next best friend, administrator of an estate, or other relative. Even if a person is granted a power of attorney there are limitations. In fact, this is a very common fraud. It is very similar to identity theft in how it is perpetrated and caught.
The Law – Can You Purchase a Policy Covering Another Person?
What is the answer? Yes, but only under specific ‘insurable interests’. These conditions are predicated on the insurance having a financial value and the beneficiary having a legal interest – it is not intended to be a gamble on the death, or manner of death, of a person. From the article, ‘Life Insurance – Can I Buy For Someone Else?’ (see Resources), following are some important key points.
To insure another person two conditions must be met: 1) Notice and consent with participation of the person whose life is being insured; and 2) Provide a reason why the beneficiary will be adversely affected financially by the insured’s death. The only exception is when parents buy life insurance on their minor child/ren. Unless you have a specific loss from the death of the other person, you do not have an insurable interest and cannot legally insure them. This is a common area of insurance fraud, and also homicides staged as accidents or death under other unusual circumstances.
Persons having insured interests include the insured, husband and wife, and parents of minor children. Adult children may have an insured interest in their parents if there is a financial relationship of the death (i.e. caring for parents, having an interest in a home mortgage, long-term care financial burden, etc.). It is also common for businesses to insure principals of the business due to potential financial loss, which still requires notice and consent.
Insurance companies are making an investment against the premiums, a bet of sorts. To hedge their bet and protect their interests they often require several things before issuing a life insurance policy. In addition to the two conditions above, consent is usually given by a signed application with a notarized affidavit of the insured. During the underwriting process a medical examination is often required.
Admittedly, when we first learned of this we did not know it was illegal to purchase life insurance of another without their consent. The explanation given to us, in one example, was the insured was the incarcerated father of an estranged adult child and the relationship made obtaining the life insurance policy. Being legal investigators and with a focus on equivocal deaths and death benefits, we knew to check on this.
Detecting and Preventing Insurance Policy and Identity Theft
As a consumer, you are empowered to assure you are protected from being the deadly subject of insurance fraud and related identity theft. Legal investigators may also be able to assist; however, for consumer protection there are limitations on who and how the access to insurance and related information is granted. There is a medical information consumer reporting agency – MIB, formerly the Medical Information Bureau. When you see a commercial for insurance in which no medical examination is required, the underwriter receives a report from MIB, similar to your consumer credit report – except it is about your health and how you are insured for health and life.
Like your consumer credit report, your medical information is subject to errors, omissions and identity theft. You can request a copy of your MIB consumer file directly from them. Legal investigators, attorneys and other persons with a permitted purpose must first contact MIB to begin their request. This should be done annually, and also if you are denied coverage or have a sudden increase in premiums.
Your health and life are not all that is insured. You may also have your automobile, home, business and other items of financial value and investment insured – even your legs if you wish and can demonstrate the requisite ‘insurable interest’ and potential financial loss. A consumer may be the target of insurance fraud and identity theft via these types of policies. To our knowledge there is not a repository, similar to the consumer credit reporting agencies or MIB, which provides this service for consumer protection. There is a service that is used by legal investigators and attorneys to determine policies, policy limits and losses.
Insurance fraud may seem to be victimless – after all, the insured (future decedent) is not paying out any premiums or benefits – a large corporation is. However, fraud is a crime and all consumers of insurance become victims through increased premiums. Moreover, beneficiaries of fraudulent policies are benefitting by the death (or accident, dismemberment or other demise) of another, without their knowledge or consent. No one can use the excuse they did not know – the process of insuring another is done with premeditated knowledge of the act. Moreover, the excuse of paying the premiums is not sufficient – the contract of the policy is concluded with the payment of benefits, which will exceed the premiums. As all persons will die, it is simply paying a premium for a known outcome for the sole purpose of financial gain.
Protecting Yourself and Your Family
Like your financial security and credit worthiness, your medical and health information is subject to identity theft. It is recommended that you obtain and review your consumer credit reports, life and health insurance reports, and any other financial and insurance reports that are available to you. This should be done annually, if you are denied any credit or insurance, and if you are assessed an unexpected increase in premiums.
- When Can You Buy or Own Life Insurance on Someone Else’s Life? by Shane Flait ©2011
- What Insurance Companies Say About You: Your MIB Life Insurance Report
- Consumers – Requesting a Policy Search
Auto, Business, Homeowner, Renter, Umbrella, Professional Malpractice, Premise, Product Liability, and E&O/D&O policies: http://mlresearchgroup.com/services/insurance-traces.aspx
- Investigators – Requesting a Policy Search
Auto, Business, Homeowner, Renter, Umbrella, Professional Malpractice, Premise, Product Liability, and E&O/D&O policies (see above)
- Credit Reports (free annually by federal law; some states are two; all are free with denied credit)
Dean A. Beers, CLI, CCDI and Karen S. Beers, BSW, CCDI
Cheyenne WY Licensed Private Investigators (No. OL-15-31146)
Board Certified Legal Investigator / Expert Consultant (national)
Board Certified Criminal Defense Investigators
Certified in Medicolegal Death Investigations / former Deputy Coroners
Associates in Forensic Investigations, LLC
A Rocky Mountain West Agency
Expert Consultants and Legal Investigators
Personal Injury, Negligence & Death in Civil, Criminal and Probate Litigation
www.DeathCaseReview.com ~ associates@DeathCaseReview.com
CO - (970) 480-7793 Office / TXT and (970) 480-7794 Fax
WY - (307) 222-0136 Office / TXT and (307) 222-0138 Fax
'Quaero Indicium' - To Find The Evidence
Keep informed - visit and 'Like' us on Facebook at www.Facebook.com/4N6Associates and our agency blog at www.MedicolegalPI.com
Listen to Facts & Forensics at www.GIMG.tv