Most stories have an epilogue that we seldom get to see. Insurance companies receive stories in the form of applications and possibly subsequent claims. Based on these, a policy is issued, or a claim decision is made, often marking the end of the story for the insurance company. Sometimes, there is a “rest of the story” not seen by the company. In this article, we will examine the story of two death claims filed on the same person and two different approaches taken to verify “the story” which resulted in two different endings.
A Tale of Two Claims
This is a story of two policies issued by two separate insurance companies on the life of Mary Jane. On November 5, 2021, Company A received an application for $250,000 term policy, and Company B received a similar application for $150,000. Mary Jane was purportedly born in 1966 and lived in Texas. The person submitting the applications, the purported insured, included Mary Jane’s full name, date of birth, Social Security number, address, and other identifying information. Both applications indicated she had no health issues except for controlled hypertension, and both listed a primary care physician. The applicant stated that Mary Jane last visited her physician for a routine annual physical, which was normal. The applications also stated that Mary Jane had not used tobacco in the preceding five years. Aside from her hypertension, nothing was medically remarkable. Both policies were paid for via a monthly charge on a credit card, and both applications named Jonathan, purportedly Mary Jane’s son, as the beneficiary. Both companies issued the requested policies.
In February 2022, Jonathan sent the insurance companies a notice of Mary Jane’s death which occurred in January. The death certificate stated the insured died of hypertensive cardiovascular disease with no contributing causes. The insured purportedly died while an inpatient in a local hospital after a brief admission. The name, date of birth, and Social Security number on the death certificate matched those on the applications. Since the death occurred within months of the policies being issued, both companies began investigations to confirm their respective liabilities. They took, however, different approaches.
Company A’s story begins and essentially ends with them requesting the insured’s medical records from the hospital and the medical doctor listed on the application. They used the insured’s name, date of birth, and Social Security number listed on the application and death certificate when requesting the records. The hospital records obtained did not contradict the information provided in the application, and the primary care physician listed on the application said there were no records. Accordingly, Company A paid $250,000 plus interest to Jonathan.
Company B took a slightly different approach to the investigation. It first researched Mary Jane’s background to confirm that the insured’s address, date of birth, and Social Security number were correctly listed on the application. Mistakes do happen, and in this case, it was learned that Mary Jane used multiple Social Security numbers, albeit only different by one digit. It seemed Mary Jane had multiple identities she used. The company also learned that Mary Jane never lived at the address provided on the application albeit it was associated with Jonathan. Furthermore, the phone number provided for Mary Jane was not associated with her; rather, it was also associated with Jonathan. Additional research on Jonathan revealed that he was the beneficiary of other life insurance policies insuring other people, each policy listing him as the son of different women/insureds. Like Mary Jane, Jonathan seemed to have multiple identities that he used.
Company B, concerned with the inconsistencies found in the preliminary research, began searching for medical records from sources beyond those listed in the application and on the death certificate. After a diligent search using other identifiers associated with Mary Jane, additional records were found. This search revealed that Mary Jane was diagnosed with cancer in October 2021, one month before the applications were completed. The insured’s prognosis was grave, and this information was not disclosed to Company A or Company B. The newly discovered records also showed that Mary Jane was a half-pack-a-day cigarette smoker and had been for many years. Given Mary Jane’s true health history, specifically the smoking history and cancer diagnosis, Company B advised Jonathan that the policy was void.
And Now, the Rest of the Story
Given the inconsistency in the insured’s phone number and address provided on the application compared to other records, it is unlikely Mary Jane knew that insurance was purchased on her life. Most likely, Jonathan knew Mary Jane and her recent diagnosis and stole her identity to have someone impersonate her so that he could profit from her death. Whether Jonathan was Mary Jane’s son is also questionable since he has claimed other women as his mother. Database research suggests it is unlikely he is related to Mary Jane. Whether the person taken to the hospital and identified as Mary Jane was, in fact, Mary Jane is also questionable, since switching identities at death (or near death) is a ploy often used in life fraud schemes particularly within closed, insular communities. What is clear is that the information on the applications for insurance was materially inaccurate, and the insurance companies relied on it when deciding to issue coverage.
Each company took measures to validate that Mary Jane had a digital profile, which she did; however, neither company found that the contact information provided for Mary Jane was not hers. They also were not concerned that Mary Jane was not paying the insurance premiums. Once the claim was received, one company began its investigation by verifying the information in the application, including the contact information for the insured; the other company did not. One company found gross misrepresentation of the facts in the application and paid nothing; the other company paid out $250,000 without knowing the true facts of the case. For Jonathan, he reaped a windfall of $250,000 based on his insight into the life insurance industry and a little luck.
And that, as the late Paul Harvey would say, is “the rest of the story.”
Kevin C. Glasgow, FLMI, FLHC, CLU®, CFE
