Could Someone Have a Secret Life Insurance Policy on You?

While it really isn’t likely, the idea that someone could take out a life insurance policy on you without your knowledge is a bit unsettling. Here, you can find out whether or not this practice is legal, how and when it has occurred in the past, and other facts about secret life insurance policies.

Is it Likely?

The first thing that you should consider if you are concerned about someone taking out a life insurance policy on you is whether or not it’s truly likely. In most cases, the only motive someone would have to do this would be fraud. Another thing to consider is that life insurance companies go to great lengths to prevent fraud and to protect you, so attempting to purchase a life insurance policy on someone else is incredibly difficult. Finally, there is what is called ‘insurable interest’ by most insurance companies, and this simply means that the person purchasing your policy must be related to you, either by marriage or by blood, or must have a close working business relationship with you.

What Steps does the Insurance Company Take?

Most of the time, insurance companies absolutely require the insured to participate in a medical examination prior to the issuance of a policy. For this reason, it is nearly impossible for someone to purchase life insurance on you without your consent; the arrival of medical personnel at your door to take blood samples would surely tip you off. Similarly, insurance companies require the signature of the insured, too, and it is highly unlikely that someone would be able to intercept every piece of correspondence and forge your signature. These things make the issuance of a ‘secret’ policy next to impossible.

The Parent – Child Relationship

The only real, legal way for someone to take out a life insurance policy on someone without their knowledge occurs when a parent takes out a policy on a child who is younger than 15 years old. This is because the insurance companies do not require a child younger than 15 to provide a signature and most child policies do not require medical exams. Of course, if the policy remains in effect and the parents don’t tell the child, then it is truly possible for a parent to have a life insurance policy on his son for 40 years or more without that son’s knowledge.

The ‘Dead Peasant’ Uproar

Up until 2006, it was entirely legal for businesses to take out life insurance policies on their employees and then cash them in upon the employee’s death with no mention ever made to the deceased’s family.  They were called ‘dead peasant’ policies because many of the deceased had no life insurance of their own and their families were left to bear the burden. In fact, for many large and well-known corporations, the ability to purchase these policies was a solid way to generate tens of millions of dollars per year in revenue. Of course, in recent years and with the increased light that was shined on the practice, it was outlawed in 2006.

In conclusion, if you’re wondering whether or not someone out there has taken out a life insurance policy on you without your knowledge, the answer is likely no. There is simply too much red tape and too many laws in place to allow for it to happen.