Safeguards built into the life insurance application process would make it extremely difficult for someone to secretly take out a policy on your life.
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When someone applies for a life insurance policy, there are several requirements that help prevent secret policies. They include:
- Insurable interest. The person taking out the life insurance policy must have an "insurable interest" in you. Basically, that means he or she must be at risk of a financial loss if you die. Examples of people with an insurable interest in your life include your spouse, blood-related family member or a business partner.
- Medical exam or release of medical information. Most life insurance policies require medical information about the person whose life is being insured. Unless you sign a release or undergo a medical exam, your medical information cannot be accessed without your knowledge.
- Your signature. Life insurance policies usually require consent via your signature. Most insurance companies also follow up with paperwork, an e-mail or a phone call.
Technically, it might be possible for someone to successfully commit fraud and take out a secret policy on your life. But this is extremely unlikely and would involve actions such as someone getting a hold of all insurance company correspondence and forging your signature.
Some businesses also offer group life insurance where it's possible to take out a policy on your spouse. But such policies typically do not have substantial payouts and are unlikely to inspire a nefarious scheme.