It is highly unlikely, but yes it is possible. Almost all circumstances, however, would prove fraudulent and today's insurance companies are quite savvy when it comes to debunking such activity.
To shed some light on this subject for you, I've compiled a list of commonly asked questions on the subject; the answers to these questions will help you understand the safety measures insurance companies take to minimalize fraudulent activity and how you can discover a policy in your name, should one exist. Always check with your insurance company directly, you can visit the Suncorp Website here.
Q: Is there any instance where an insurance policy taken out on an individual could be legal without their consent?
A: Technically, there are two instances where someone could take out an insurance policy on you, without your knowledge, or consent.
1) Insurance companies do not require consent if a parent, or legal guardian, takes out an insurance policy on a child younger than 15 years of age;
2) Some employers offer group life insurance benefits that extend to spouses, to where a policy could be taken out on the spouse of an employee without their knowledge. However, Cliff Wilson—President of the National Association of Insurance and Financial Advisors—states, "Group life insurance amounts are usually not substantial".
Q: How do insurance companies prevent someone, or a business, from taking out a fraudulent policy on a non-consenting party?
A: The life insurance application process is very thorough and provides several obstacles that combat all possible fraudulent activity; of course, in some cases, sheer forgery could bypass the process. This process includes the following:
- a Medical Exam
- a Signed Consent for Release of Medical Information
- "Insurable Interest" Check—insurance companies will investigate the policy buyer to determine whether, or not, they have a relationship with the insured that renders insurable interest. For example, someone related by blood, marriage, or whom has a financial business relationship with the insured, would be considered someone with insurable interest.
- All Policies Require the Insured's Signature for the Policy
- Follow Up Phone Calls
- Business-Owned Policies Must Also Have Signed Consent (as of 2006)
"Hopefully they would have been aware of what they signed," says Brian Ashe, past Chairman of the Life and Health Insurance Foundation of Education, "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 the application, I've received a follow-up call verifying the information, and the insurance company will ask if an insurance interest exists here."
Q: If I suspect someone may have a life insurance policy out on me, whether it be legal or fraudulent, how can I find out for sure?
A: Usually, your best bet for discovering an unconsented policy is to contact the MIB Group (no, not the Men in Black), the Medical Insurance Bureau, recently renamed the MIB Group. This organization maintains over 170 million records pertaining to life insurance applications filed with over 475 insurance companies (United States & Canada) within the last 14 years and monitors fraudulent activity.
Q: How do I request my MIB file?
A: Call their toll-free number, answer a lengthy list of automated questions, and wait 6 to 10 days to receive your MIB file in the mail, for free. You'll notice that MIB does not keep detailed medical records on file; just the basics, so rest easy!
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.