The fact of the matter is that some people do commit life insurance fraud. Each year, millions of dollars are lost because of fraudulent claims. The life insurance companies don’t just eat those costs, however. They have to make it up somewhere. So, they pass it along to you, the consumer. In the same way that you might pay slightly more for shoes because of theft or counterfeiting, so you’re likely to pay a bit more on your term life insurance policy premium because of life insurance fraud.

In addition, you or a family member can become a victim of life insurance fraud. Someone may take out a policy without your knowledge, and benefit when you pass away even though you didn’t sign off on anything.

To be sure, the life insurance companies have fraud detection mechanisms, and they do catch some of the perpetrators. Still, they could use a helping had, at times. Here are some ways you can be on the lookout for life insurance fraud:

• Learn about life insurance fraud. In many cases, fraud takes place without the knowledge of the insured individual, or they are tricked into a policy that the fraudulent person is named as beneficiary. If a relative or other loved one is getting bills for an insurance policy that they’re not familiar with, or if they’re getting notifications from a life insurance company, it can indicate that there has been some sort of fraud.
• Signatures are important, too. If a long lost cousin suddenly comes out with a life insurance policy on a relative that’s been in a coma for five years, you have reasons to be suspicious. If you know for a fact that the person can’t sign their name, it should raise a flag.
• Talk to authorities. If you suspect that there has been life insurance fraud, talk to your local police department. You can also contact the life insurance company, who can take the investigation way beyond what you’re going to be able to do on your own.

Photo via Derrick Coetzee