What is still very amazing is that, on average, fraudsters often consider themselves too smart for the law. And working on this assumption, as faulty as it clearly is, they walk themselves right into trouble.

A few months ago two celebrated cases in which two men, in separate and unrelated incidents, killed their wives to claim huge life insurance payouts were on the front burner of news media. While each of the culprits worked very hard and even deluded themselves that they had successfully covered their tracks to avoid being fingered, they were, in the end, not only suspected but also clearly found to be culpable. The law is not as stupid as some would dismiss it.

Life insurance policy and invalidation

One of the commonest frauds a life insurance policyholder could commit is refusing to this disclose vital information regarding their situation, particularly health-wise. Often the outright repercussion is the invalidation of one’s life cover or having a claim declined or both.

The implication, therefore, is that while such policyholders may not be completely regarded as fraudsters, the fact that they hid some essential information from their insurer makes them liable.

Life insurance fraud

Talking about life insurance fraud in this sense takes us back to the issue of the two men mentioned earlier, who killed in order to claim money from policies that had their murdered wives names when taken and could make huge payouts following their death. While the issue of murder or homicide, which comes as a measure to make the whole plot a success, is taken seriously by the state and punished within the context of the law, the weight of evidence relating to the insurance fraud is, in itself, considered fully and appropriate penalty applied.

In the above cases, like most others, each of the culprits had his motivation for carrying out the act: life insurance money. But in one case an extra-marital incentive was also found to have hugely played a role. However, another clear similarity is that they both tried to make their crime look like an accident. Eventually, they were found out and made to face the consequences.

Another case is that of a former US prisons executive in South Carolina, who for example, was found guilty of giving a false statement to an insurer in order to claim on his deceased father’s life insurance in 2002. Even though he took out the life cover on his father’s behalf in the first place, the fact that he made false pretences and lied in a statement, according to the charges, made him guilty and was sentenced to a prison term of three years. In addition, he was ordered by the court to pay more than $50,000 (about £34,000) in compensation to the insurance company. It was actually the exact amount paid to him more than three years ago by the insurer.

End of lies

All efforts to cover up lies, as the above and other cases have proved, often boomerang. In one foolishly planned fraud case, parents set their home ablaze and let the fire consume their own children in the belief there was a life insurance payout to be gained. In the end they were to find out they had misled themselves as there was not life insurance cover in the name of the poor little kids.

Their axis of error, like those of all fraudsters, consisted of poor judgement influenced by greed etc. The reward is, usually, a criminal conviction among other penalties.