Life insurance companies sometimes deny or delay claims by alleging that the beneficiary committed fraud or was involved in wrongdoing related to the policy or the insured’s death. These accusations can lead to lengthy investigations and may result in a complete denial of the claim if the insurer believes fraud occurred.
Beneficiaries facing these allegations often encounter requests for documents, interviews, and extensive claim investigations before the insurer makes a final decision.
Attorney Christian Lassen represents beneficiaries nationwide in disputes involving denied and delayed life insurance claims.
Why Insurers Raise Fraud Allegations
Insurance companies have a financial incentive to investigate claims carefully when they suspect fraud. If the insurer believes that a beneficiary intentionally misrepresented information, falsified documents, or participated in wrongdoing connected to the insured’s death, it may attempt to deny the claim.
Fraud allegations are sometimes raised when:
The insurer believes documents were altered or falsified
The beneficiary allegedly misrepresented facts during the claim process
The insurer suspects the beneficiary was involved in the insured’s death
Financial motives surrounding the policy appear suspicious
Multiple individuals dispute the validity of a beneficiary designation
Even when these allegations are raised, the insurer must rely on evidence to support its position.
Fraud Allegations Involving the Beneficiary Designation
One type of dispute occurs when the insurer believes the beneficiary designation itself may be fraudulent.
Example:
A beneficiary change form appears shortly before the insured’s death, and family members claim the insured never signed the document.
In these situations, the insurer may review signatures, policy records, and communications to determine whether the designation was valid.
Allegations That the Beneficiary Caused the Death
In rare situations, insurers may investigate whether the beneficiary was involved in the insured’s death. Many states have laws preventing a person from receiving life insurance proceeds if they intentionally caused the insured’s death.
Example:
A criminal investigation is opened after the insured dies under suspicious circumstances, and the insurer delays the claim while the investigation continues.
If the beneficiary is cleared of wrongdoing, the insurer may still need to process the claim according to the policy terms.
Fraud Claims Based on Application Information
Sometimes the insurer alleges that the beneficiary participated in providing inaccurate information on the life insurance application.
Example:
The insurer claims the beneficiary helped complete the application and failed to disclose important medical information about the insured.
These disputes often involve reviewing the application process and determining who actually provided the information recorded on the form.
Disputes Over Financial Motive
Insurers sometimes examine financial relationships between the insured and the beneficiary when evaluating fraud allegations.
Example:
The insurer believes the beneficiary had a financial incentive related to the policy and investigates whether the policy was obtained for improper purposes.
Financial motives alone typically do not determine whether a claim should be denied, but insurers sometimes use these issues as part of their investigation.
Claim Investigations and Document Requests
When fraud is suspected, the insurer may conduct a detailed investigation before issuing a claim decision. Beneficiaries may receive requests for extensive documentation.
These requests may include:
Copies of the life insurance policy and beneficiary forms
Medical records and physician statements
Financial records involving the insured and beneficiary
Police reports or investigative records
Statements from individuals involved in the claim
These investigations can significantly delay payment while the insurer gathers information.
When Fraud Allegations Lead to Interpleader
If the insurer believes there is a serious dispute regarding the beneficiary or potential wrongdoing, it may file an interpleader lawsuit. In this situation, the insurer deposits the policy proceeds with the court and asks a judge to decide who should receive the benefit.
Interpleader cases often arise when multiple individuals claim the proceeds or when the insurer believes there is a risk of paying the wrong party.
Legal Help With Life Insurance Fraud Allegations
Fraud allegations can place significant pressure on beneficiaries and may delay payment of the life insurance proceeds for months or even years. When an insurer denies a claim based on alleged fraud, the decision often depends on the evidence the company relies on during its investigation.
The Lassen Law Firm focuses exclusively on life insurance disputes nationwide. Attorney Christian Lassen has more than 25 years of experience handling denied, delayed, and contested life insurance claims.
If a life insurance claim has been denied due to allegations of beneficiary fraud, legal review can help determine whether the insurer’s decision can be challenged.