What is insurance tombstoning?

Answer 1

This is where unscrupuless insurance agents use the names of dead people and create insurance policies for them. Agents often work on large up front commissions so get money almost immediately a new policy is signed.

The average policy lasts for 20 years so the big insurance companies were happy to pay up early especially if the first 2 years of the premium was paid in advance. This was usually the trigger to get paid the maximum commission early.

The math was simple: 2 years premium, say $800.00. Commission on a new policy to the dodgy insurance agent, $2500.00. The agent figures that they can milk the cow till they get out with the money.

Oh and instead of looking through the births deaths etc a quick trip to the cemetery was all that was needed to get the names.