A deathly get-rich scheme you do not want to be part of

Laura du Preez | 10 May 2022

Laura du Preez has been writing about personal finance topics for more than 20 years, including eight years as personal finance editor for two leading media houses. 

Life insurers’ fraud investigations have turned up more evidence of deathly get-rich schemes in which syndicates take out funeral insurance on victims they subsequently kill in order to submit a claim.

Syndicates, particularly in the Eastern Cape, look for every opportunity to exploit and there has been an upward trend in unnatural deaths in the last few years, Megan Govender, convenor of the Forensics Standing Committee at the Association of Savings and Investment South Africa (ASISA), says.

These organised criminals were involved in 68 of the 3268 cases of fraud involving funeral policies last year, statistics released by ASISA today reveal. In four cases beneficiaries of policy proceeds were involved in this fraud.

Syndicates are familiar with life and funeral insurers' policies and procedures. In some cases they murder a victim. In others they obtain paupers' corpses from mortuaries and stage hit-and-run accidents, Govender says.

As insurers are doing more to uncover the fraud, syndicates have taken to using runners (or mules) to do the work for them, he says.

It isn’t always syndicates that kill.  Opportunists – sometimes family members - have also killed for life insurance payouts.

Govender says one life insurer is investigating a suspicious case that arose last year when cover was taken out a day before a mother and her daughter were shot in a field in the Eastern Cape.

South Africans were shocked last year by the court case of Nomia Rosemary Ndlovu, a former policewoman, who was handed six life sentences for the murder of her partner and five family members in order to claim funeral and life insurance taken out on their lives.

Also last year, Pastor Melisizwe Monqo and hit man Phumlani Qhusheka were sentenced to life for the 2018 murder of a member of the God’s Work International Ministries whose life they had insured. Monqo’s wife Siphosihle Pamba received a 20-year sentence.

High-profile cases involving murders contributed to R787.6 million in fraudulent and dishonest claims on funeral, life and disability claims that were detected last year, the ASISA statistics reveal.

Look out for the vulnerable

The increase in syndicate involvement has led one life insurer to warn South Africans who have family members who abuse alcohol or drugs and / or live on the streets, not to let unscrupulous people take advantage of them by getting their identity documents and taking out policies on their lives. 

Priyen Moodley, an independent Forensic, Risk and Business Intelligence Consultant, says syndicates apply for cover for people who are homeless, sickly, abusing substances or involved in gang or criminal activities.

After a relatively short period of time – typically under two years – the insured person dies unnaturally from gunshot wounds, a stabbing or a hit-and-run accident and the motive proves to be the insurance claim, he says.

In other cases, family members insure the lives of these people because they know they are vulnerable, he says.

Carina Thompson, a manager at Xtnd, a forensic and fraud detection company that works with Assupol, says people from all walks of life can fall victim to fraud, but the homeless and the addicted are particularly vulnerable.

Sometimes they are coerced into assisting fraudsters to make misrepresentations to insurers to initiate a policy, she says.

Moodley suggests vulnerable relatives be encouraged to get counselling or enter rehabilitation. Additionally, they should not share personal information, such as identity numbers, with strangers, he says.

Funeral policies favoured

Killers who seek to profit from their victim’s deaths often use funeral policies, as the cover is easy to take out and pays out quickly – some companies will pay out in four hours.

Funeral policies also have shorter or no waiting periods for accidental deaths.

Policy benefits can be as high as R100 000 and some insurers pay double the benefit for accidental deaths. There is also no limit on the number of policies you can take out.

Keep yourself safe

Moodley says if you know or suspect that someone has taken out cover on your life in an irregular manner, you have the right to make contact with that insurer to verify this.

Alternatively, you could contact your financial adviser and request an updated list of policies taken out on your life, he says.

Thompson says there are also consumer sites that promise free reports. In return you may be required to give permission for the site to share your details with a financial advisory practice.


Govender says fraudulent and dishonest claims were a small proportion of the R608 billion paid last year to honest policyholders and their beneficiaries.

However, if left unchecked, fraud and dishonesty would ultimately result in higher premiums for the honest, he says.

This is a good reason to blow the whistle if you are aware of fraud.

Moodley says insurers have fraud hotlines and you can also report crime to the South African Insurance Crime Bureau or to the police.

You can make anonymous reports, but keep them factual with as much information as possible about who is involved, and how, in the alleged fraud, he says.

Fraudulent documents

You can also keep fraud numbers down by reporting the theft of your identity documents or cards to the South African Police Services and to the Department of Home Affairs.

Last year insurers uncovered 2271 cases worth R295 million involving fraudulent documentation.

Fraudsters use identification documents to create fictitious deaths or forge birth or marriage certificates, and to take out policies and submit fraudulent claims.

Moodley suggests you also list missing documents with the South African Fraud Prevention Services (SAFPS) to flag your identity as compromised.

Thompson says you should ensure that you use only the correct and credible details of institutions when you provide the death certificate or the death report on a family member. Fraudsters can use a death certificate or report to profit from your relative’s death.

Don’t lie

Misrepresentation of facts is also fraud. Insurers detected more than 3 000 cases involving R487 million in which policyholders had misrepresented facts.

Govender says misrepresenting or not disclosing important information such as lifestyle or health issues is incredibly short-sighted.

“When claims are declined as a result, this is likely to have devastating financial consequences for those financially dependent on a policyholder,” he says.

In one extreme case detected last year, a nurse used someone else’s blood to support her claim for a severe illness benefit. She alleged she had suffered a needle injury at work that resulted in her being infected with HIV.

Investigations revealed there was no such incident. Her attempt to defraud the insurer earned her a R10 000 fine and suspended five-year jail term.