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Life Insurance & Missing Persons – How Does it Work?

Trying to obtain life insurance benefits for a missing person can be almost as agonizing as the actual search for a missing person.

In fact, collecting on the life insurance policy of a missing person is almost impossible, says LaDonna Meredith, president of Arkansas-based Let’s Bring Them Home, which operates a national missing-adults program.

To begin any life insurance claim process, a death certificate is required. In missing person cases, life insurers may accept a court order declaring the insured person is dead, says Whit Cornman, a spokesman for the American Council of Life Insurers.

missing persons life insurance

Accepting the fact that a loved one isn’t coming home or convincing a judge that a loved one is dead “is a very difficult process,” Meredith says.

Making the Claim

Generally, payment of life insurance benefits for someone who’s missing requires “proof of loss,” says Don Kemp, a financial representative with Espey Financial Group in Atlanta.

If someone disappears without explanation, courts may find that the insured person is dead or presumed dead under the following conditions, according to the American Council of Life Insurers:

• The person has been missing for a specified period of time (seven years in most circumstances).

• The person’s absence is unexplained.

• A reasonable search for the person has taken place.

• No one has communicated with the person since his or her disappearance.

The insurer can pay the policy proceeds to the beneficiary if the policy was in effect on the date of the insured person’s presumed death, Cornman says.

Being Presumed Dead

In the thousands of cases Let’s Bring Them Home has handled, only a couple of families who’ve had missing family members have pursued life insurance payouts. In one case, a family sought to have a husband and father declared legally dead; he was the family’s primary breadwinner. “It was a dire situation for them,” Meredith says.

One life insurer, Guardian Life Insurance Co. of America, says it’s never paid a life insurance claim on a missing person.

Missing Persons: By the Numbers

For every Elizabeth Smart or Jaycee Dugard who returns home, thousands of Americans go missing annually and their disappearances remain a mystery.

As of Dec. 31, 2010, there were nearly 86,000 active missing persons cases in the United States, according to the National Crime Information Center. More than eight times that number of people were reported missing in 2010, with most cases either being solved or invalidated.

Missing persons cases take an emotional toll on family members, some of whom experience financial difficulties as they cope with everyday life while awaiting news that a spouse, child, parent or sibling is dead or alive. Not being able to count on benefits from a life insurance policy adds to the emotional and financial pain.

In addition to missing persons cases, there also are situations involving victims of natural disasters, such as earthquakes and tsunamis, whose bodies aren’t immediately — or ever — found.

Preventing Fraud

Murder-for-hire and faked-death cases make life insurance companies skittish about paying claims in missing persons cases.

James Quiggle, a spokesman for the nonprofit Coalition Against Insurance Fraud, says: “Declaring a person missing fraudulently can lead to payouts of hundreds of thousands of dollars and even into the seven digits. That’s a large hit for any life insurance company, thus it’s a concern.”

Overall, insurance fraud costs Americans $80 billion a year, according to the coalition. Quiggle says statistics about fraud involving murder-for-hire and faked-death cases aren’t available, but anecdotal evidence suggests these crimes happen regularly.

The typical seven-year waiting period for life insurance payouts in missing persons cases gives authorities time to investigate whether the person really is dead, Quiggle says, or simply in hiding and waiting for the insurance benefits to kick in.

“You can try to pull a fast one like that by planting evidence that suggests that you died in order to deflect law enforcement from thinking that this might (be) fraud,” he says.

Quiggle says someone is not likely to give up his friends, job and life for a $25,000 payout, but policies that are worth hundreds of thousands of dollars or even millions of dollars are much more tempting targets for fraud.

“You don’t simply go up and disappear and reroute your entire life for small sums of money,” he says.

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