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Husband returns from the dead. Can the wife keep the $1.2m insurance?

This interesting life insurance story broke in the NZ Herald a week ago about a New Zealand man who faked his own death and whose wife subsequently cashed in on his $1.2 million life insurance policy. Now there's a raging debate about whether or not his wife can keep the windfall.

According to the Herald story, the man (whose identity is suppressed) went missing in late 2002 after his car was found abandoned at a disused quarry at Port Waikato. Last year, his wife had the High Court declare him legally dead and collected on his life insurance. But the man was found alive in Christchurch after he applied for a passport under his own name (duh). Police initially accused his wife of two counts of fraud, but reportedly now believe she was innocent and legitimately believed her husband was dead.

Ok, so now we have the Herald quoting insurance experts saying his wife may be able to keep the money “because she appears to have made the claim in good faith thinking that he had genuinely died”.

Whilst I’m no legal expert, I have a different view.

This is a case in which a life insurance company has been defrauded. The insurance policy in question was supposed to pay out on the death of the insured person, and in this case, the insured person is still alive. It’s true the court declared him dead, but that ruling will, I’m sure, be overturned because he is clearly not dead. I can’t see any life insurance company sitting back and taking this $1.2 million smack on the chin without a real fight. And whilst I feel sorry for his wife, I’m far from convinced that she has any legal right to keep the money just because she wasn’t complicit in the fraud. I think the out-of-pocket insurance company will be knocking on her door quite soon. Whether she has $1.2 million to repay is another question entirely. They may even have grounds to sue him!

For anyone thinking about getting rich on life insurance by faking their death… here’s some cold water for your idea...

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