Can someone buy a life insurance policy in my name without permission?


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If true crime podcasts have taught us anything, it’s that people hurt the people they claim to love.

Key points

  • Despite what happens in the movies, no one can buy an insurance policy in your name without your permission.
  • You determine the beneficiary of the policy.

Purchasing a life insurance policy allows you to financially support your loved ones even after your death. But what if someone else wants a policy on your life and decides to name themselves as the beneficiary? Could it be possible?

The answer is no

Purchasing a life insurance policy always involves the person named on the policy. Insurance companies will not allow anyone to take out insurance on your behalf without your consent. The only exception to the rule is when a parent or grandparent purchases a child’s life insurance policy. In the case of grandparents, parental consent is usually required.

Insurance policies can be worth so much money that it’s tempting for greedy people to look for a way to inherit. Unfortunately, trying to profit from someone else’s death is nothing new.

The scary story

Not only is Foreign Owned Life Insurance (STOLI) illegal, it is also difficult to obtain. In 18th century England, some criminals took out life insurance policies on people they knew to be in poor health, designating themselves as beneficiaries. Policy-issuing companies had no way of accessing policyholders’ medical records or determining the level of risk.

Once the insured died, insurers were responsible for payments to the beneficiary. It was a pretty effective scam for a while, and some people were making real money running the scam.

The scam was successful enough to make it to the United States, where some people saw it as a gamble. They prepaid, hoping the person they were insuring didn’t have long to live.

The practice was eventually banned in the United States and England.

Negative result – for the scammer

Suppose someone decides to take out a life insurance policy with you as the insured. Not only would the life insurance company require your consent, but the person buying the policy would have to prove they have an insurable interest in your life.

Even if someone tried to circumvent the law, it would be difficult to get out. Here are four reasons:

  1. It is unlikely that the individual will have access to all the information requested on the application form. They will need to provide your height, weight, hobbies, employment, personal and family medical history, and social security number.
  2. The life insurance company will not just take the information provided on the application at its word. They will likely verify that you live and work where indicated. In short, they will try to contact you at some point, and the template will be in place. You will know that someone is trying to purchase insurance on your behalf.
  3. The scammer would have to forge your signature to underwrite a policy without your knowledge. Under Boonswang Law, if you die within the two-year contestability period, the insurer’s fraud department will review the application and medical questionnaire with a fine-toothed comb. If they find anything that looks “offended,” they’re likely to deny the claim, and the scammer will be left with nothing (except fraud charges and possible jail time).
  4. If you die after the contestability period, the scammer will need an original death certificate to file a claim for benefits.

Not worth the effort

Even though life insurance scams were once lucrative, the chances of getting away with them today are so slim that smart criminals should know it’s not worth it.

While it’s nearly impossible for anyone to take advantage of a life insurance policy you knew nothing about, there are plenty of other ways dishonest people can take advantage of you.

Be careful who has access to your personal information, such as your social security number. The better you protect your identity, the less likely someone is to defraud you.

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