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Client dies in mysterious accident. What would you do?

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Two people get married. One takes out large life insurance policy on the other. Then the person who has the policy dies in an “accident” while together. The survivor collects large death benefit and lives the high life.

This seems to be the deluded dream of many a deranged spouse, who seem to think they can get away with it and no one will be the wiser. Sometimes they do, and we never hear about it. But lots of times we do hear about it, and instead of living large with the help of a seven-figure death benefit payout, they live small in an 8-by-10 cell for the rest of their lives.

Recently, a man in Highlands Ranch, Colo., was arrested and charged with murdering his second wife by pushing her off a cliff while they were hiking in the mountains more than a year ago. His story is that she slipped and fell to her death in a tragic accident.

But her out-of-state family was suspicious, and life insurance companies are very cautious about cutting seven-figure checks to a beneficiary who may have had something to do with the demise of the insured. More suspicion arose when it was discovered that the man’s first wife also died in a tragic “accident” years before when their car fell off a jack and crushed her while they were changing a tire along a rural road. The man, who apparently has not had held a job for many years but always had access to money, reportedly collected as the beneficiary of his first wife’s life insurance. His first wife’s death is now under investigation as well.

Cases like this puts a spotlight on the role that the insurance agent who sold them the life insurance policy should play in the investigation.

Let’s consider a hypothetical case. An agent sells life insurance policies to a recently married couple – they each take out policies with each other as the beneficiary. As they are signing the paperwork, the husband and wife seem to joke around about killing each other off so they can collect on the life insurance, and it becomes apparent that the wife is adamant that her husband obtain significant coverage.

Just over two years later, the agent learns that the husband has died in a suspicious accident while with his wife, who was unharmed.

What is the agent’s most ethical course of action?

• Stay out of it completely unless contacted?

• Help the widow make a claim for the death benefit?

• Contact police to relay suspicion about the death?

• Contact the carrier or the state insurance commissioner’s office to relay suspicion?

Steven R. McCarty, Chairman of the National Ethics Association weighed in on this scenario. Below are his thoughts on how agents can ensure to act ethically.

“This is certainly a touchy scenario. On the one hand, an agent doesn’t want to raise issues with authorities only to have them prove unfounded. This could have serious implications from both a liability as well as a professional reputation perspective. On the other hand, if the agent buries his well-grounded suspicions, he will carry a heavy ethical burden if the husband’s murder goes unprosecuted. So what are the options,” according to McCarty.

”Staying uninvolved might be an appealing course of action. Homicide detectives always probe for insurance, so the wife’s motives will surely come to light. But what if the husband and wife never told anyone about their policy? The police might never uncover it unless the agent steps forward. Imagine not doing so and having that on your conscience for years to come. As a result, most ethical agents will do the right thing and make their suspicions known to authorities. The question is how.

“We believe it would be best for the agent to report his suspicions directly to the insurer. This will allow the carrier to notify the police and support the investigation on their end. At this point, the police will contact the agent for further information, and the agent should cooperate fully,” according to McCarty.

“Why report to the carrier and not the police? Because informing the police is not without risk. Anyone who is desperate or greedy enough to kill a spouse for money may well exact retribution or even violence on the person who blows the whistle. We believe it’s best to work through “back channels” to assure that justice is done.

“Why not notify the insurance commissioner? For two reasons. First, a life insurance producer is legally considered an agent of the insurance company. That carries with it a number of obligations, including full disclosure of information relating to the sales of insurance or the processing of claims. Since the agent sold the policy, he or she is duty bound to provide the insurer with all material information regarding the claim. Second, an agent who takes this obligation seriously shouldn’t rely on a third party to pass crucial information to the carrier. Why take the risk of information falling through bureaucratic cracks? For these two reasons, it would be best to for the agent to communicate directly with the insurer,” McCarty said.

“As for the question of assisting the widow, we believe the agent should still assist the widow with claim filing. Early on, the agent only has suspicions. Until authorities confirm them, the agent has no recourse but to do what he or she would normally do for the beneficiary. However, once the carrier is aware of the beneficiary’s alleged role in causing the insured’s death, the insurer will put the claim on hold, and the agent will be off the hook,” he said.

He summarized by stating, “this scenario is fraught with ethical, legal, and potentially safety consequences for the agent. An ethical agent will work hard to support the criminal-justice system, while assuring the safety of all concerned.”


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