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  • What are the most common types of life insurance fraud?
  • August 1, 2013
  • By Emily Miller

    Life insurance fraud is a crime that costs the industry hundreds of millions of dollars each year. It involves deceiving insurers, family members, or business partners and it translates to higher rates for honest policyholders.

    There are five common types of life insurance fraud:

    Stranger-Owned Life Insurance

    This is when a stranger owns the policy on someone’s life. It is one of the biggest scams out there right now. The insurance is purchased in the intent of eventually transferring ownership to a third party, typically investors.


    This is when an agent offers a “better” but more expensive policy to current policyholder. In reality, there is little to no difference between the two other than the fact that the agent will collect a nice commission.


    Fraud like this involves an agent increasing your net worth, making it appear that you can afford a bigger annuity. As a result, you may have to pay a large surrender fee in order to access your money.

    Fake Death

    A common but rather difficult type of fraud to execute is faking the death of someone who is insured. The person could still be alive or is some cases never even existed. Some people go to extremes measures to execute this, such as staged funeral and forging a death certificate.

    Bait and Switch

    In this scenario, you believe you are getting one type of insurance but soon find out that you are purchasing life insurance. The commission on life insurance is higher than most other types of insurance.

    Before purchasing any type of life insurance, make sure you are going through a reputable company and you understand what you are getting. Investing in life insurance is an excellent way to protect you and your family in the future. If you treat purchasing life insurance like any other major decision, you shouldn’t run into any problems.

  • Category: Life Insurance, Life Insurance; Tony Steuer Columns

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