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Insured to Death:
Life Insurance and the Crimes It Inspired
© 2020, Stephanie Hoover - All Rights Reserved. Permission Required for Re-Use or Distribution.
The big insurance payout.
It’s been the central plot device in countless books, TV series and movies. Yet while homicide is the most popular fictional means to this lucrative end, in real life it's just one way criminals seek to defraud insurers.
Fake suicides, mysterious disappearances, self-mutilation - they've all been attempted with varying degrees of success.
In fact, when it comes to life insurance and the crimes it inspires, the truth is far more shocking than anything you might imagine.
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From Clouded in Mystery Publisher Stephanie Hoover:
From ancient days there have been guilds whose members band together to care for the sick and infirm among them.
By the middle ages, brokers were offering insurance against slavery and capture by pirates - major threats of the time.
Eventually, indemnity against other frequent hazards, such as death at sea, were accepted investments.
Soon, though, people were speculating on all kinds of risks - reasonable or not - ranging from incidents of robbery and murder by highwaymen, to whether a man might divorce, and even if or when a woman might lose her chastity.
Looking back, it was a short leap from these hedges to betting against the human lifespan.
It is an interesting commentary on mankind that one of the first recorded life insurance policies was purchased as a gamble. In London in 1583, Richard Martin secured a policy on a man named William Gibbons. The policy covered only a one-year period. If Gibbons were to die within those twelve months, Martin would receive a handsome payout.
As ghoulish as it sounds, this practice was actually quite widespread. It was not uncommon for neighbors to, in effect, speculate on one another's life expectancies. More disconcerting, however, was the ability of perfect strangers to buy policies on one another - a serious cause for concern, particularly when the insured showed no inclination to die on schedule. It didn’t take long for impatient policyholders to realize that a little push might speed the payout.
Graveyard insurance, as the practice of insuring the soon-to-be-deceased was known, was a lucrative business for sales agents. There are few more notorious examples of the sordid side of this business than a series of cases in Pennsylvania in the 1880s. For several months, speculators in Lebanon, Berks, Montgomery, York and Luzerne Counties gambled on the death dates of octogenarians, paupers and consumptives.
Mrs. Emma Reinart of Amity Township, Berks County, died of consumption while staying at the home of her father. The grieving parent was shocked to learn of a policy on his daughter’s life worth $26,000. It favored her first cousin who had little, if any, relationship to the departed.
The most notorious of these Pennsylvania schemes involved a group of men who would live in infamy under the collective moniker “The Blue-Eyed Six.” Their victim, Joseph Raber, lived at the foot of the mountain range bordering what is today the Fort Indiantown Gap National Guard Training Center. Half a dozen of his neighbors contributed toward the purchase of a life insurance policy valued at $8,000. Once purchased, two of the conspirators led Raber to a shallow stream, tossed him into the water, and held him down until he drowned. Unfortunately for the would-be beneficiaries, one of the conspirators was a talkative drunk. The plot was quickly exposed and five of the six men - all of whom a reporter noticed had blue eyes - went to the gallows.
Regardless of the bad ending for “The Blue-Eyed Six,” insurance fraud spread to other Pennsylvania counties. More than 200 “death rattle cooperatives” were identified before the state’s attorney general and insurance commissioners earnestly worked to exterminate these practitioners. But once exiled from Pennsylvania, operators simply moved to Ohio, Maryland, Indiana, Massachusetts and beyond.
Of course, not everyone could callously resort to murder to collect on life insurance proceeds. Take the 19th century case of Mary Fry. Several months before her death, her son purchased life insurance in her name. Coverage totalled $27,500. He immediately presented the claims to the insurers who, upon investigation, found Mrs. Fry to be gravely ill but still breathing. Worse, it was revealed that this scoundrel son wasn't acting alone. He was, in fact, aided and abetted by his mother’s physician, the local preacher and others - all of whom would presumably share in the proceeds.
Other would-be fraudsters planned to cash-in not on others’ deaths, but rather their own. Drowning was the preferred method of faking a death, likely because it lacked the violence of other methods of self-decease. There was one major drawback, however. Some authorities exhibited a pesky insistence on actually recovering a body. The lack of corpus delicti presented by a fake drowning scenario led suspicious insurers to investigate, and in many cases, deny liability.
Perhaps the most shocking perpetrators of insurance fraud were those willing to mutilate their own bodies to capitalize on life insurance’s cousin, “accident” insurance. Unlike life insurance (only payable on death) accident insurance covers catastrophic bodily injury and loss of limbs and eyes.
In July 1893, a man named Hicks wrote a letter to his insurance company. In it he explained that, while cleaning his gun, it accidentally discharged, badly injuring his hand. He would be unable to return to work for at least 30 days, Hicks told the insurer. By the time he received the claim forms, however, his circumstances had apparently changed. It could be as many as six weeks before his hand healed, he now claimed. In the meantime, Hicks hoped to leave the hospital to return to his family home. What could he do to collect his indemnity sooner rather than later, Hicks wondered.
Sensing deception, the insurance company launched a full investigation of the case. The injury was as severe as Hicks had described, that much was certain. What was less clear was how it actually occurred. Investigators became even more skeptical when they learned that Hicks had taken out accident insurance with not one - but several carriers. When presented with all of this evidence, Hicks confessed.
“I came to see, by a careful study of what policies covered, a chance to make big money. I increased my line of insurance accordingly to $20,000 and, had I been successful, I would have collected $7,500 for the loss of my left hand. I was perfectly satisfied to part with it for that price.”As was later revealed, Hicks was far less satisfied with his attending physician who, contrary to Hicks’ wishes, refused to amputate the hand - a disfigurement that would have netted a much higher payout.
As the life insurance industry evolved and matured, fraud of any kind became harder to perpetrate. The most critical deterrent came in 1876 when the Connecticut Mutual Life Insurance Company filed a lawsuit based on the concept of “insurable interest.”
The principle was simple: unless one individual had a proven and necessary financial interest, he or she could not insure the life of another person. Certainly, spouses and children had an insurance interest in a husband or father, for instance. Likewise, businesses had a proven fiduciary interest in key partners and employees. But estranged or distant relatives, random neighbors, and greedy insurance agents could no longer play the lottery of human lifespan speculation.
As might be expected, the concept of insurable interest was quickly adopted by other life insurance companies, as well as state legislatures. It helped staunch the flow of the morbid avarice of faux suicide, murder, and self-mutilation - yet, as with all human behavior, only so much can be controlled through law and policy. There are still, and likely always will be, those who believe they can pull the wool over the eyes of insurance adjusters, investigators and medical examiners.
In 1984, while returning from a trip to Atlantic City, Robert O. Marshall and his wife Maria pulled into a deserted rest stop to, according to Robert, change a flat. A car pulled in behind him, he said, and someone knocked him unconscious. When he came to, he found that his wife had been shot to death.
Police had a different theory. Their investigation unveiled Marshall’s massive debt, ongoing infidelity, and a whopper of a life insurance policy on his wife - $1,500,000, to be precise. Marshall, an insurance broker, was convicted of his wife’s murder in 1986. In 1990, Joe McGinnis wrote Blind Faith, a best-selling book about the case that was later produced as a TV mini-series.
In 2004, Marshall’s death sentence was commuted to life on the basis of ineffective counsel during his original trial. He was scheduled to appear before the parole board in the spring of 2015. It was the first parole hearing since his incarceration. Marshall died in February 2015, just one month before he planned to present his case for release.
If only there was insurance against guilty verdicts. ☁