Insurance Fraud is a felony. Claims are either false or exaggerated, and most times certain information are held back in order for the claimant to obtain the benefits that the insurance company has to offer and to avoid certain penalties. In this event, the claimant can be fined $150,000 or 10 years in prison. (Associated Content, 2007). It has been stated that at least %10 of all insurance claims has been fabricated and in North America the insurance industry pays out more than $30 billion in fraudulent claims. (Fraudcast, 2009) One of the most common insurance fraud would involve life insurance.
Life insurance is a type of coverage that pays benefits upon a person's death or disability.(Answer, 2009) This will financially secured the person whom the insured has chosen to take this responsibility which is known as the beneficiary (Wikipedia, 2009). After the Insured’s death, the proceeds that has been accumulated over the period of time, will then be used to pay for the cost of funeral service or any other necessary cost of needs or debts.
Life insurance fraud is widespread. Sometimes desperate times call for desperate measures. With a good plan in mind, scamming insurance companies would probably be the only best answer when people are in desperate for an easy way out of debt. It can be risky but people do take that chance. Statistic has shown that in 2008, fifty-one life insurance fraud cases has been reported by the news media. (Coalition Against Insurance Fraud, 2009).
Insurance fraud can be planned out in a couple of ways. One most common way would be when the claimant fakes their death, therefore their family or whomever they wish can collect the money in advance instead of having to wait. (Coalition Against Insurance Fraud, 2009) In one news article taken place in Britain, a 57 year-old man by the name of John Darwin has been charged for faking his death.(CBS News, 2007) It was claimed that he had “declared officially dead after an...