Only Finance.com - Clamp down on life insurance ‘swindlers’- to promote cheaper life insurance

Life Insurance - Clamp down on life insurance ‘swindlers’- to promote cheaper life insurance

Life insurance can be highly beneficial finance to family members or loved ones after an untimely death. People find it comforting to know that their spouse or business associates will not face financial ruin after they are deceased.

So why is it that millions of people commit fraudulent acts running the risk of losing their life insurance, ruining their quality of life and ultimately devastating the lives of people most dearest to them?

According to a new study by Norwich Union 7% of people admit to committing fraud, and nearly half(43%) would turn a blind eye to a friend’s or relatives dishonest actions. This shows that dishonesty is on the increase in contemporary british society and could eventually become the norm.

Recent media speculation surrounding the Ann and John Darwin case has put life insurance scams under scrutiny as more and more people attempt to make bogus claims as extreme as faking their own death or exaggerating ill health in order to claim lump sums of money.

Insurers administer thorough investigations into such claims ‘last year Norwich Union identified and denied 20,000 fraudulent claims, worth approximately £150 million’. If this isn’t a warning to potential swindlers of the current market then it’s uncertain what will prevent this from taking place.

Fraud is costing the industry £1.6 billion a year. Successful scams are having a knock on effect on the cost of premiums as research shows that fraudsters increase the cost of insurance by £40 per average premium. This could have a huge impact on high risk groups such as those with obesity and diabetes – whose premiums could rise up to 50% or more if they coincide with other high risk groups e.g. smokers.

What people fail to acknowledge is that the industry take strong measures to prevent fraudulent acts and few people escape imprisonment. The fraud act 2006 penalises people such as Mr darwin on the basis of fraud by false representation.

The rise of new media has allowed internet access more accessible to the majority. Websites are designed to ensure that people can get a quote and compare the market within minutes. This ensures cheaper premiums to suit different lifestyles and personal requirements, so the need for fraud is simply invalid as the clamp down on fraudsters escaping the net is becoming increasingly rare in the UK.