If I Die While Overseas, Could My Beneficiaries Collect?

If I Die While Overseas, Could My Beneficiaries Collect?

There are all sorts of things to plan for when taking a trip overseas, but it’s safe to say that one thing few people plan for is dying.

Yet 1,049 U.S. nationals died while visiting another country in 2010, according to statistics from the U.S. State Department. The State Department provides a list of American deaths overseas from non-natural causes based on country and year.

Nearly all of those deaths were documented with proper investigation and a legitimate death certificate, but there have been a handful of instances where no body was found and little investigation into the circumstances of the death was conducted. That’s a recipe for someone to scam the system, says Ryan Pinney, a life insurance risk specialist with Insurance Services in Roseville, Calif.

“This isn’t a big problem for insurance underwriters, but it’s on their radar,” says Pinney. “That’s why insurance companies ask a lot of questions about foreign travel and citizenship in their prescreening interviews.”

And that, says Pinney, is the best chance insurance companies have to address even the remote possibility someone wants to travel overseas and intentionally disappear in order for his or her family to cash in on a big life insurance policy.

“All life insurers do this. Typically, what they all try to do is find out why someone is traveling, and who is planning on traveling outside of the United States for two weeks or more at a time over a two-year period,” said Pinney. “Those are the ones they want to pay particular attention to.”

And while world hotspots like the Middle East, Southeast Asia and parts of Africa are automatic red flags, it’s a country closer to home that’s getting a lot of attention from insurers. Insurers want to find out why you’re traveling to certain areas. Are you in the military and seeking additional coverage? Are you a missionary who’s going to be gone for two or three years? Are you simply visiting your family?

“During wars, you might not be able to get coverage, or it’s going to be a lot more difficult to get coverage,” said Pinney. “You’ll pay an awful lot more or the provider will limit the amount of coverage you can buy. If you’re visiting Israel, for instance – or any country in the Middle East – you might want $5 million in coverage but you may only be able to get $1 million and it’s going to cost a lot more. That’s one way insurers limit their risk.”

But it’s not Israel or Afghanistan or Iraq that’s drawing the most scrutiny; the risks are well defined there. The country drawing the most attention is Mexico, a vacation magnet for Americans.

“With the drug war that’s going on there, it’s becoming more difficult to obtain coverage while traveling there,” said Pinney. Of the 1,049 U.S. nationals who died overseas last year, 27 percent of them – 279 people – died in Mexico, and 105 of those deaths were ruled homicide.

Those kinds of numbers make insurance companies take another look at the risks they’re willing to take in providing insurance to people who travel, says Pinney.

His company, which provides insurance and advice to insurance companies, specializes in assessing the insurance risk of travel to countries around the world. He explained that if someone dies, as long as there is a body, proof of the cause of death (which is usually a death certificate), insurance companies will generally pay out benefits to the family. However, if there is no body and the circumstances surrounding the death are uncertain, the company my delay paying benefits for anywhere from seven to 10 years.

“It doesn’t happen often, but it does happen,” said Pinney. In the United States, there is a contestable period of between one and two years in which the insurer doesn’t have to pay benefits, but after two years, the payment is usually made.

“That allows the insurer time to investigate any possibility of malfeasance or fraud or to find out if the person knowingly bought a policy to defraud the company,” said Pinney.

James Quiggle, spokesman for the Coalition Against Insurance Fraud in Washington, D.C., says, “Insurers are very alert to fake deaths in foreign countries, especially Third World countries. It happens all the time.”

Quiggle says it’s no secret that life insurance companies employ an array of investigators around the world to look into the deaths of their policyholders. “It’s not unusual for someone to bribe local officials to issue a fake death certificate. That’s why it’s important for insurance companies to have experts in those countries, people who know the lay of the land, who know the language, who know the culture and who know how to uncover fake documents.”

Even though Quiggle says the problem isn’t unusual, it’s not something where there are figures to show how big it is.

“I don’t think anyone knows,” he says, adding, “There is a lot of money at stake. It’s not uncommon for a foreign national living here in the U.S. to die while visiting their home country. It’s happened that someone died in a fiery car crash and the body couldn’t be positively identified.

“People have gone to such extremes that they’ve created fake funerals with paid mourners and buried caskets full of rocks,” said Quiggle. “A few years ago, there were firms you could hire in Haiti to help you organize something like this.”

While Haiti is a notorious place for mysterious deaths and insurance fraud, Quiggle says Syria and Jordan have similar reputations. But even with all the apparent planning and assistance available in places like Haiti, Quiggle says things can go wrong.

“There was a couple who went to Haiti to fake her death. It was supposed to look like she was killed in a robbery by motorcycle thugs, but she was really killed,” said Quiggle. “There is a lot of skullduggery like this.”

Steven Brostoff, a spokesman with the American Council of Life Insurance says the issue isn’t something that looms large on the organization’s radar.

“Fraud issues are more of a concern for the individual insurance companies than it would be for us, but we haven’t heard of anything like this,” said Brostoff.

Spokesman Harry Edwards says the department’s first priority is the welfare of citizens, but in the case of a death, it’s up to the host country to investigate it. Edwards says the agency encourages foreign travelers to acquire traveler’s insurance in case they get sick or are injured, but that’s about it.

“We’ve had to deal with finding people in a country and getting them out, and we provide consular visits to people who are in jail and help them get legal representation,” says Edwards, adding that any mysterious death of an American traveler is left up to local officials to investigate.

According to the State Department’s web site, “The Bureau of Consular Affairs provides guidance to grieving family members on how to make arrangements for local burial or return of the remains to the U.S. The disposition of remains is affected by local laws, customers and facilities, which are often vastly different from those in the U.S.”

Because of the limited role the federal government plays in investigating such instances, Quiggle says it’s important that insurance companies “have boots on the ground” around the world.

“Bogus death certificates happen so often that you have to have experts investigate them,” says Quiggle, adding that it doesn’t take a lot of cash to bribe an official in some countries to create a bogus document.

“Claimants are so clever at this that it does take on an air of Hollywood,” said Quiggle. “There is no end to the creative methods people will try to take advantage of the system.

According to the State Department, when issues of fraud do crop up, insurance companies are on their own when it comes to getting to the bottom of it.

Top 10 countries where U.S. nationals died in 2010:

1. Mexico, 279

2. Haiti, 131

3. The Philippines, 38

4. Costa Rica, 33

5. Thailand, 30

6. Dominican Republic, 22

7. Afghanistan, 19

8. South Korea, 18

9. Bahamas, 17

10. Germany and Italy, 16

Top 10 countries where U.S. nationals were murdered in 2010

1. Mexico, 105

2. Philippines, 13

3. Honduras, 9

4. Haiti, 8

5. Dominican Republic, 7

5. El Salvador, 7

7. Costa Rica, 6

7. Colombia, 6

9. Guatemala, 5

9. Jamaica, 5

9. Nigeria, 5

Top 10 countries where U.S. nationals died in vehicle accidents in 2010

1. Mexico, 79

2. Philippines, 17

3. Thailand, 12

4. Canada, 8

5. Australia, 7

5. Costa Rica, 7

7. Saudi Arabia, 5

7. Greece, 5

7. China, 5

7. Dominican Republic, 5

(Vehicle accidents include automobiles, motorcycles, buses and trains)

Source: U.S. State Department annual report for 2010