How common is life insurance fraud?

How common is life insurance fraud?

virginia insurance fraudBy LifeQuotes.com

Virginian Danny Marks, 41, has been sentenced to two years and two months in prison for his plot to defraud life insurance companies out of millions of dollars, WAVY-TV reports. Marks’ brother Mitchell was sentenced to 10 years in prison last week on related charges.

Together, the Marks brothers took out life insurance policies on elderly, sickly members of their family. In order to perform the fraud, they misrepresented a number of answers to questions on the policy applications. Not only were they dishonest regarding their relationships to the insured, but they also lied about the insured’s health and proceeded to take out multiple policies on each individual. The brothers also sent false impostors who were in good health to undergo health exams so that they could qualify for the lowest premiums.

During the life of the scam, the brothers not only took out $16 million worth of policies, but they also received $3.5 million in payouts following the deaths of two of their relatives whose information they had used.

Life insurance fraud is perpetrated relatively infrequently when compared to other types such as auto and medical insurance fraud. Still, the Coalition Against Insurance Fraud reported that there were 35 year-to-date arrests and/or convictions relating to life insurance fraud as of October 2010.

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