Life Insurance Fraud: Be Vigilant & Responsible Citizens

Life insurance fraud is the intentional deception by the applicants of life insurance policies or by the sellers of the policy to obtain specific financial benefits. The Life Insurance fraud statistics reveal soaring amounts lost due to insurance scams and fraudulent acts. People often indulge in various types of schemes resulting in foul play. Some of the most common types of Life Insurance Fraud cases have been presented below;

In addition, there also have been cases where individuals have indulged in the hideous act of murder for enjoying the benefits of an insurance plan.

A very popular life insurance fraud case is the John Darwin disappearance case, an ongoing investigation into the faked death of British former teacher and prison officer John Darwin, who turned up alive in December 2007, five years after he was thought to have died in a canoeing accident. Darwin was reported as "missing" after failing to report to work following a canoeing trip on March 21, 2002. He reappeared on December 1, 2007, claiming to have no memory of the past five years.

An Insurance fraud may be classified as ‘hard fraud’ and ‘soft fraud’.

Hard Fraud is committed when someone deliberately fakes an accident, injury, theft, arson or other loss (or worse, such as a life insurance beneficiary killing an insured) to collect money illegally from insurance companies. Many act alone, but increasingly, organized gangs stage large schemes that steal millions of dollars.

Soft Fraud is committed when people often tell “little white lies” to their insurance company. Some of the most common lies by insurance applicants include statements to hide facts like smoking, cancer or other disease in the family and so on. An intentional lie will also cast doubt on the rest of your application, which could compel the insurer to examine everything more closely and possibly delay its decision

Whom to Report Fraud?

In the US although the federal government is involved in the prosecution of fraudsters, it is the state insurance departments, state attorneys general and county district attorneys’ offices that do most of the investigation, enforcement and prosecution of insurance fraud because most of the anti-fraud laws are state statutes.

Title 18 of the U.S. Code, Section 1033 is used to prosecute anyone engaged in the business of insurance (executives, employees, sales agents) who is involved in the perpetration of insurance fraud.

If you are suspicious of an insurance fraud case or have been defrauded, then the report of a fraud may be filed through one of the following channels;

• Fraud Bureau
  
• Insurance Company that has been defrauded. Many have their own hotlines.
  
• National Insurance Crime Bureau

The Report of fraud should include all the necessary details like dates, names, organizations involved, details of the insurance company defrauded or that did defrauding, amount lost, documents and other related materials.

If a person is proved guilty of committing fraud, then that individual is subjected to Life insurance fraud penalties which may include one or more of the following;

• Imprisonment
  
• Fine
  
• Probation
  
• Parole
  
• Reconstitution
  
• Community Service

As enlightened citizens and members of the community, it is our moral duty to first, be aware of the nature of insurance fraud, be vigilant and last but not the least, report any such instances of fraud to the appropriate authorities.