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Secret life insurance policies can happen, but there’s actually many obstacles that impede someone from taking out a secret policy on someone else. 

Here’s why secret life insurance policies are more common in movies than real life: 

  • Most life insurance policies require a medical exam of the person being insured. You would surely be tipped off by a paramedical examiner coming to your home and taking your blood samples.
  • Most policies require you to sign a consent for release of your medical information.
  • Insurance companies make sure that the person buying the policy has an “insurable interest” in the insured. Brian Ashe, an insurance professional and past chairman of the Life and Health Insurance Foundation for Education, says there needs to be an insurable interest evidenced by blood, marriage or business relationship. That can include someone who relies on the spouse’s income. Your neighbor, for instance, wouldn’t be able to show he has a financial interest in your life.
  • Even policies that don’t require a medical exam will require the signature of the insured.

“Hopefully, they would have been aware of what they signed,” says Ashe. “There’s oftentimes a follow-up phone call from the insurance company or agent to make sure information on the application is correct and verify income and basis of need. So I’ve signed an application, I’ve received a follow-up call verifying the information and the insurance company will ask if an insurable interest exists here.”

All things considered, it would be pretty hard to sneak through a secret policy.

Forgery and forgetfulness are possibilities

But there are ways it could be done. Outright fraud would be one way; for example, someone intercepting all insurance company correspondence and forging your signature.

Also, if a parent were to buy life insurance on a child younger than 15, the insurance company doesn’t require the child’s signature. When that child becomes an adult, it’s possible he may not know that his parents hold a policy on him if he’s never told.

If you have group life insurance through work with the option to add coverage for your spouse, it’s possible to sign up your spouse without his or her knowledge. Cliff Wilson, former president of the National Association of Insurance and Financial Advisors, notes that group life insurance amounts are usually not substantial.

Companies were once allowed to buy life insurance policies on employees without the employees’ knowledge or consent. The policies paid out benefits to the employer in the event of an employee death. But uproar over these “dead peasant” policies, put an end to that. Now business-owned life insurance policies must have the consent of the insured, too.

So, you can rest assured knowing that it’s extremely unlikely no one is going to receive a big life insurance check without your knowledge. You can contact the best life insurance companies to discuss their safeguards against fraud.

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Penny Gusner


Penny is an expert on insurance procedures, rates, policies and claims. She has extensive knowledge of all major insurance lines -- auto, homeowners, life and health insurance. She has been answering consumers’ questions as an analyst for more than 15 years and has been featured in numerous major media outlets, including the Washington Post and Kiplinger’s.