The ABI has claimed that life insurance is rarely the subject of major fraud cases.

The ABI contends that life insurance companies have a number of checks and balances in place to minimise fraud and there are very low levels of fraud in the life insurance arena. Due to the large sums involved in policies, fraud is a popular method to a lot of money. Fraudulent life insurance claims can add significantly to the cost of policies because of the large sums that are often involved, meaning that life insurance companies put in a great deal of effort to tackle the problem.

The most common reason for buying life insurance is to replace the income lost when a person dies. Life insurance proceeds can be used to continue to support family members who still need to rely on the income of the person since deceased.

Another common use of life insurance proceeds is to pay off any debts left behind. Mortgages, car loans, medical bills, and credit card debts are often left unpaid when someone dies. Life insurance can be used to pay off these debts, leaving other assets intact for the family to use.