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Secret Life Insurance Likely Wouldn’t Stay Hidden for Long

Oct. 12, 2015
Insurance, Life Insurance
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Movies like the 1944 classic “Double Indemnity” may make us wonder whether we could concoct a scheme to take out secret life insurance on someone and then profit from their demise.

Can you really do that? Can someone do it to you? Thanks to hurdles in the process of buying life insurance, it’s unlikely. Buying a life insurance policy on someone else is a lot more involved than, say, getting a magazine subscription in their name or signing them up for Netflix. Someone could take a policy out on you, but you’re almost certainly going to know about it. Here’s why.

Checking you out

An insurance company will require your signature on an application for any life insurance policy on you and probably on a release for your medical records, Department of Motor Vehicles report and other records. Even if your spouse led the charge to get life insurance quotes for you, you’ll need to sign papers.

Also, someone can’t own a life insurance policy on you unless they have an “insurable interest” in you. That means:

  • A close emotional bond, such as a marriage.
  • A close blood relationship.
  • A substantial economic tie, such as a business partnership.

Of course, it’s possible someone with an insurable interest in you might want you dead. But you can take comfort in knowing strangers and casual acquaintances can’t take out secret policies.

In addition, for policies with higher amounts (typically over $50,000), an insurance company will require a medical exam. Depending on the size of the policy, this exam could include:

  • Tests of saliva, urine and blood.
  • Physical measurements like height, weight and blood pressure.
  • An electrocardiogram.

When lab tests are required, insurers have a paramedical professional come to your home or office to collect specimens. Someone can’t just send in blood or urine.

How secret life insurance could happen

It’s hard to take out secret life insurance on someone, but technically it is possible.

For example, parents can take out life insurance on a minor child, and such a policy could remain in place after the child becomes an adult. If the parents never mention it to the adult child, it’s “secret” life insurance.

If your spouse’s employer extends group life insurance to workers’ spouses, it’s possible your spouse could sign up and have a small amount of “secret” life insurance on you.

Finally, there’s the Hollywood scenario, which requires considerable effort. Someone could attempt to buy a policy, perhaps one that requires no medical exam, forge your signature on relevant documents and pose (or have someone else pose) as the applicant when the insurer calls to gather information. Theoretically they could even hire someone to kill you in an effort to get the payout, but chances are high police or insurance investigators would discover the crime and fraud.

So it could happen, but your life has far bigger risks, such as driving on the highway.

Aubrey Cohen is a staff writer at NerdWallet, a personal finance website. Email: [email protected] Twitter: @aubreycohen.

Image via iStock.