The Burden of False Medical, Home, Auto and Life Insurance Claims

In the United States, nearly $80 billion is estimated to have been paid in false home, auto and life insurance claims in 2005.  In addition to that, Medicare fraud is estimated to run nearly $175 billion per year.  

That means that in addition to the cost that is incurred with ever increasing medical, home, auto and life insurance premiums, a burden of over $800 per year (2006) is paid by each and every person with an insurance policy.  However, among these, life insurance seems to be the most serious and contrived type of insurance fraud, though accounting for a small percentage of monies lost.

In the case of life insurance, the most common form of claimant fraud is trying to collect on a claim where the insured has not actually died.  Many states have their own fraud investigation units, as do most life insurance companies.  For instance, in Atlanta, life insurance claims that are suspected to be fraudulent are referred to the Georgia Department of Insurance.

Of course, sometimes such fraud cases make the news, as in the case of particularly insidious claims that have been discovered.  One such incident occurred in central Georgia, when a man claimed his wife was killed in the September 11th attacks only to have a neighbor accidentally mention that she'd been seen around their small town.  A few phone calls later and the couple were both in jail for several years to come.

In very serious cases, life insurance claim fraud can take the case of actual foul play.  Though this happens rarely, when such issues do happen, they often make national or international news.  In an effort to curb such behaviour, many states in the US have a ordinance that requires life insurance policies to be in effect for at least one year before they may be collected on, regardless of the circumstances of death.  Furthermore, most life insurance companies require two years before premiums can be paid.  

That doesn't stop everyone, however, since life insurance polices can be taken out for persons other than yourself.  In fact, many places allow a life insurance policy to be taken out on a person without their knowledge.  Some US states have regulations regarding this practice as well, after several well-publicised cases of fraud involving vagrants and the very poor signing onto life insurance policies only to perish shortly after they took effect.

Though most people don't care very much about what happens to nameless and faceless life insurance companies, it is important to note that no life insurance company is going to just take that sort of loss without passing it on to other life insurance policy holders.

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