Life insurance is a promise of security for families. However, where there is money, fraud is rarely far behind. Fraudulent life insurance claims are not new and they are reportedly on the rise in India. One such case surfaced just last week in the crime pages of city dailies. Two sons, whose middle-aged father held substantial life insurance cover, allegedly set a snake on him to kill him for the insurance money – twice. Alert neighbours rushed the man to hospital the first time and saved his life. The sons then tried again, this time using a snake with faster acting venom.
That, coupled with a call to the insurer’s claims department barely 15 minutes after the death certificate was issued, brought the fraudulent scheme crashing down. Outright murders for gain like the one above become movies and get copycatted by other criminals.
Meanwhile there are many types of under-the-radar frauds relating to life insurance and you may even become an unwitting party to one and get into trouble with the law.
How does fraud affect you and me, the honest policyholders? Fraud pushes up premiums over time as insurers price in this risk. Compliance requirements increase as companies and regulators tighten norms to prevent abuse. Claims settlement becomes slower and more rigid, even for legitimate claims, as procedures grow more elaborate. This adds to the friction of buying and using insurance and erodes public confidence in what is meant to be a protection product.
Identity theft
There are scenarios that should make every reader pause. Consider the disturbing possibility of a wealthy individual being targeted, with a high-value life insurance policy taken without his knowledge. To make a claim, the perpetrators either need him dead or need documents that say he is. Most people share aadhaar and other KYC documents freely; biometrics can be stolen or fabricated.
The lesson is simple: guard identity documents closely as identity theft can have disastrous consequences. Similarly, documents or signature can be forged to buy bogus policies and support fraudulent claims, sometimes backed by fake death certificates.
White-collar criminals often come with a friendly face and a helping hand. If you have a lapsed policy or are struggling to keep one active, be wary of offers to “help” by paying premiums on your behalf. they will ask for the policy to be assigned to them in lieu of their ‘service’. This is illegal to begin with, and insurers will not allow assignment to an unrelated party. A policy is not like a market investment instrument that can be freely transferred by endorsement and delivery. If such an assignment is somehow engineered, remember this again: for the fraudster to cash in, you either need to die – or documents must say you have. It is difficult to even say whom to trust. While your closest ones may be entirely innocent, they too could be misled by someone else.
Protecting oneself
Never buy a policy from an unverified source. Contact the insurer directly or, if approached by an intermediary, verify credentials thoroughly. Ask how you were identified as a prospect. Cross-check the intermediary’s details with the insurer and request formal authentication.
Ensure documentation is complete and accurate. Do not cut corners, even if advised to do so for convenience. No one can insist on your Aadhaar number. PAN and other documents deserve equal care. A masked Aadhaar or Virtual ID from the UIDAI portal is sufficient. Consider locking biometrics and unlocking only when verification is needed.
Avoid sharing OTPs or sensitive documents over WhatsApp with unknown parties. Be suspicious of callers demanding processing charges or citing IRDAI norms. IRDAI does not involve itself in policy issuance or require payments. Buying insurance is only the first step. Keep your policy safe, confidential, and active. Review policies periodically to ensure no unfamiliar or incorrect information appears on them. If you spot errors, write to the insurer and have them corrected promptly. Use only official contact details listed in the policy to seek help.
Escalate unresolved grievances to the insurer’s grievance officer, then to IRDAI via its portal, and finally to the Insurance Ombudsman if needed. Fraud is like a deadly leak: everyone loses. Regulators tighten rules, insurers add layers of procedure – but the best protection is you: An informed, alert policyholder who refuses to be careless or complacent.
(The writer is a business journalist specialising in insurance & corporate history)
Published – December 29, 2025 06:04 am IST
