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Industry Newness

5 Crazy Insurance Fraud Examples

Industry Newness

5 Crazy Insurance Fraud Examples

Some of the most ridiculous life insurance stories of fraud, deceit and murder.

Whenever life insurance shows up in TV shows and movies, often there’s an element of enticing deceit. Just picture the 1944 film, Double Indemnity. These are dramatizations for sure. But life insurance stories are, for a good amount of real-world people, normal and calm and part of everyday financial life. Then there are the people for whom the allure of life insurance payouts causes them to do really weird things most of us wouldn’t even consider. Here are 5 insurance fraud examples that put the “death” in death benefits.

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  1. Why life insurance is important
  2. 5 insurance fraud stories
  3. What are insurance fraud punishments?
  4. Life insurance facts
  5. TL; DR

Why life insurance is important

Is life insurance a scam? Absolutely not. Life insurance is a tool that can provide financial protection for you and those who are financially dependent upon you. That can mean your spouse, partner, kids, parents and even business partners and even roommates. If there are people dependent on you, financially, having a life insurance policy can be a great addition to the financial tools you have.

5 insurance fraud stories

Though life insurance is to provide protection for policyholders, that doesn’t mean everyone sees it in that same way. In fact, some people may see life insurance as a “get rich quick” process, rather than a protective one. We’ve already covered how some people will try to prey on unsuspecting consumers with life insurance scams. But what about people who try to scam their way into life insurance payouts? Well, that’s where things get a little bit more…exciting. And deadly.

Molly and Clayton Daniels

In 2004, Molly Daniels lost her husband Clayton in a car accident. The car crashed, burst into flames and, initially, all signs pointed to the corpse in the driver’s seat as being Clayton. However the evidence didn’t add up. There weren’t any skid marks, the gas tank hadn’t been ruptured and the fire didn’t seem to come from the engine. Plus the DNA of the victim in the car seemed to be from a woman. One thing did help investigators—positive evidence of lighter fluid originating from the driver’s side of the car.

Investigators knew the fire wasn’t an accident. As it turned out, Clayton Daniels was due to report in jail just six days after the accident. And he had a $100,000 life insurance policy. It was revealed that Molly and Clayton dug up an 81-year-old woman who had died six months prior, placed her in the car and set the car on fire all with the intention of running away with the insurance death benefit. In response, Clayton was sentenced to 30-years in prison and Molly was sentenced to 20-years.

The Black Widow Murders - Helen Golay and Olga Rutterschmidt 

Helen Golay and Olga Rutterschmidt, colloquially known as The Black Widow Murders, are one of the wilder life insurance fraud stories. Their plot? Befriend homeless men, take out life insurance policies on them and then run them over with a car to collect the payout. The duo were able to pull off their plot in 1999 and 2005 before authorities began to be suspicious.

In the latter case, both women took out life insurance policies on Kenneth McDonald, a homeless man they offered boarding to, claiming to be a business partner, relative and a fiancee on various applications. They tried their scheme with a third man but were arrested in 2006 for the murders of Paul Vados in 1999 and Kenneth McDonald in 2005. Both women were sentenced to life in prison.

The Murder Trust 

Mike Malloy might rival Rasputin for how hard he was to kill. In New York City in 1933, five crooks—Tony Marino, Joseph “Red” Murray, Francis Pasqua, Hershey Green, and Daniel Kriesberg—noticed that Mike Malloy, a homeless man from Ireland, would drink a lot then pass out in the street. The five crooks plotted to take out three life insurance policies on Malloy then get him to drink himself to death. Overall the men stood to gain $3,500 (almost $83,000 in 2023).

However the plotters hadn’t planned on Malloy being such a powerhouse drinker. Eventually they replaced his alcohol with antifreeze. When that failed, they tried turpentine. Then they fed him oysters soaked in alcohol, a sandwich filled with rotten sardines and carpet tacks and even stripped him naked outside and drenched him in ice water. Malloy wouldn’t die. The five crooks, desperate, then forced a gas pipe down his mouth to kill him. They were quickly found out, however, with four of the crooks being sentenced to death and the fifth (Hershey Green) receiving a life sentence.

John and Anne Darwin

In March 2002, John Darwin went out on the ocean in his canoe. When he failed to show up at work and at home a search operation was launched. When any evidence failed to turn up, John was pronounced dead. At least that’s what everyone except John and his wife Anne thought about the situation. In reality, the two of them hatched a scheme to claim insurance and other benefits.

John, after riding out in his canoe, camped out for some time before returning to his home, staying in a property next to his and Anne’s house. There he stayed for a number of years, even going so far as to let his sons believe he was truly dead, before heading overseas to Panama. However, John was arrested upon returning to London in 2007. He was given six years and Anne was sentenced to six-and-a-half years in prison. Their marriage did not survive their sentences. 

National Heritage Life Insurance Company Fraud - Sholam Weiss

Sholam Weiss is a centerpiece in what is believed to be the dissolution of the National Heritage Life Insurance Company, the largest insurance company failure ever caused by criminals. Weiss became involved in a scheme to siphon money from the National Heritage Insurance Company, which had about 35,000 customers, 10,500 of whom lived in Florida. Weiss and the other fraudsters bought worthless stocks and mortgages with the company’s money, draining it of hundreds of millions of dollars. Weiss himself received millions directly into his accounts.

Though policyholders were able to recoup their funds, the company was liquidated in 1995. Weiss fled the country and lived as a fugitive until he was extradited back to the US in 2002. Found guilty in absentia, Weiss was sentenced to 845 years in prison for his role in the life insurance scam. However, he was pardoned by President Donald Trump in January of 2021.

Graphic detailing the five insurance fraud stories in the article: Molly and Clayton Daniels, Event Year 2004, Attempted Fraud $100k, The Black Widow Murders: Event Year 1999, Attempted Fraud $800k, The Murder Trust, Event Year 1933, Attempted Fraud $3,500, John and Anne Darwin, Event Year 2002, Attempted Fraud £250k, National Heritage Life Insurance Company Fraud, Event Year 1990, Attempted Fraud $450 million
Five stories of insurance fraud

What are insurance fraud punishments?

The above life insurance fraud stories are dramatic in their own unique ways, but insurance fraud is a part of the insurance game. Life insurance reportedly has the most amount of fraud, with annual losses of around $40 billion. Those losses get passed on to individual policyholders. But when caught committing life insurance fraud, the punishments themselves can vary. 

Application rejection

If you provide false information on an insurance application and the company finds out, your application could be rejected outright. Some people will lie on applications to get lower premiums or higher coverage.

Policy cancellation

If you lie on an application but the company finds out later, your policy could be canceled outright. In turn you could be listed as a high-risk applicant, making finding coverage with other companies more difficult. 

Claim denial

If the insurance company finds out you lied on an application and your family moves to file a claim, the claim itself could be denied on the grounds of the life insurance fraud you committed. 

Prison and fines

As with our stories above can attest, severe enough life insurance fraud can result in prison time and fines. The severity of the insurance frauds punishment can vary depending on how severe the crime was and the state that you’re living in. 


In some insurance frauds examples, you may be required to pay restitution to return the unlawfully gained payments. Restitution can sometimes happen alongside fines, prison or both.

Life insurance facts 

Life insurance is, in essence, a contract between you and an insurance company. When you apply, the company is calculating the risk in covering you. But when life insurance fraud happens, individual policyholders can be affected as well. That’s why it’s always important to be honest when filling out a life insurance application. You don’t want your application to be rejected for something as silly as lying and you wouldn’t want your family to have their claims denied when they would need it most. 

Some people saw, and still see, life insurance as a way to get rich, either by scamming the companies themselves or manipulating events to receive the payout. But life insurance isn’t a get-rich-quick tool. At Wysh we believe that having a sense of financial security is key to long-term peace of mind. That’s why life insurance is important. Some people either lose sight of that or they never had it to begin with.

Life insurance from Wysh

If you’re not like any of the above murderers, cons and scammers, and are in the market for term life insurance, you can click here and try our free Wysh Builder tool to build your own perfect policy. You’re not required to apply to visualize what you’d like to see in your own term life policy. If you like what you see, applying can take less than 10 minutes. Just make sure you’re honest while you’re filling out the information. Wouldn’t want to put your name in this list, no would we?


  • Insurance fraud results in annual losses of approx. $40 billion in the US. 
  • Insurance fraud examples can include non-disclosure, exaggerations and deliberate fraud each with their own specific punishments and consequences. 
  • Insurance fraud punishments can include:
  • Application rejections
  • Policy cancellations
  • Claim denials
  • Imprisonment and fines
  • Restitution

Insurance fraud punishments can also vary due to state law.

The opinions we expressed in this post are for general informational purposes only and are not intended to provide specific advice or recommendations.