After the much publicised case of John and Anne Darwin and accusations of fraudulent life insurance claims, the ABI has claimed that life insurance is rarely the subject of major fraud cases.

The pair's case has brought with it huge media attention when Mr Darwin walked into a police station claiming to be a missing person having lost his memory. However, police have arrested both Mr and Mrs Darwin after a photograph of the couple emerged showing them together long after Mr Darwin had supposed to have died in a canoeing accident. Accusations of life insurance followed thereafter but the ABI have been quick to claim that their particular case was a striking exception and that life insurance is not a popular avenue to pursue for fraud.

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.

Still life insurance is as susceptible to fraud as any other type of policy and there are points to note in order not to fall prey to fraudulent individuals and insurance companies. For instance, be careful of any life insurance plan that promises "vanishing premiums" or guarantees you a premium-free policy over a specific period. Individuals should never be pressured into signing a life insurance policy; there are no deadlines to face. Similarly, never buy coverage you don't understand. It is the agent's and company's responsibility to explain your coverage in terms you can comprehend.

You should also save every piece of paper explaining your coverage and your policy. Keep them on file with your policy. If the agent used a laptop computer, insist on a hard copy version of what you were shown. If a new policy replaces an old policy, make sure the old coverage is not terminated until the new policy has been issued. Also, an agent should explain how you will benefit whenever one policy replaces another.

You should never buy life insurance as an investment without understanding that some of your "investment" is paying for your coverage. Life insurance provides protection against economic loss resulting from death. Also be careful of "special opportunities" to expand coverage for a non-working spouse or children.