Life insurance fraud is on the rise, and the fraudulent claims are getting more and more brazen. Here are some of the most shocking scams − all of which were foiled.
The South African insurance industry has seen a shocking rise in fraudulent life insurance claims recently, with the Association for Savings and Investment South Africa (Asisa) reporting a 12% increase between 2019 and 2020. It's bad enough that more people are taking their chances with false or fraudulent claims, but what makes it worse is how utterly shameless some of these scams are.
"Since funeral insurance policies do not require blood tests and medical examinations, and are designed to pay out quickly and without hassle when an insured family member dies, criminals and dishonest individuals most commonly try their luck in this space," says Megan Govender, convenor of the Asisa Forensics Standing Committee.
Govender offered up a few horror stories of fraudulent claims uncovered by Asisa's investigators. We're sharing them here to show you just how brazen these crooks are... and as a warning that – especially when it comes to insurance fraud – crime never ever pays.
In one case, a family took the body of their deceased relative from the mortuary before the death could be registered, and placed said body in the road in the hopes that it would be hit by a car. When that happened, they reported a hit-and-run accident and submitted a claim. Hectic.
In the case of deaths that result from natural causes, funeral policies typically impose a six- to 12-month waiting period to prevent people from only taking out policies when they are terminally ill. A hit-and-run accident wouldn't be subject to that waiting period. Still, there's no justifying what that family did.
Some mortuary employees have started a side hustle selling corpses to syndicates, who then use the bodies to claim against fraudulent policies they take out as part of the scheme. It's gross and it's wrong... and Asisa is wise to it.
"If funeral cover is taken out on someone who does not exist, by submitting fraudulent documentation, the criminal will have to commit a further crime by either buying a dead body or murdering someone to enable them to claim," says Govender. Many choose to buy unclaimed dead bodies rather than extend their criminal activities to murder.
In another shameless scam, there's a syndicate that collects and uses personal data from down-and-out drug addicts and alcoholics, and uses it to submit fraudulent funeral policy applications. They'll convince the impoverished addicts that they're collecting their data for a job offer, getting all their details (right down to their banking information).
In one particularly chilling case, the syndicate tried to murder the person whose details they'd used on the policy. When he escaped, the syndicate then tried to buy a body instead, only to be caught out when investigators discovered that the insured individual was still alive.
To any normal person, the notion of stealing someone else's identity (let alone stealing a corpse!) would sound absolutely crazy. And the consequences of getting caught trying to defraud your insurance company – even if it's by fudging facts on a form – are simply not worth it.
Govender says that life insurers have implemented sophisticated fraud detection mechanisms using digital technology like artificial intelligence and Big Data, and the industry as a whole has become increasingly adept at uncovering insurance fraud. As she points out, "The chances of being caught are extremely high and the consequence is likely to be a lengthy prison sentence."
Horrified by these stories? So were we. If you're a law-abiding citizen who's looking for the most reasonable life cover to protect your family, then use our hassle-free tool to compare Life Insurance quotes.
This article is for informational purposes only and should not be construed as financial, legal or medical advice.