Synthetic Identities & Life Insurance Fraud in 2025

Imagine approving a solid life insurance application: documents look accurate, the Social Security number (SSN) checks out, and everything appears legitimate. Fast forward, months later, a death claim comes through. But as the investigation unfolds, you realize the policyholder never existed. The identity was entirely synthetic, meticulously constructed to confuse underwriting systems and extract a payout.

Synthetic identity fraud has rapidly emerged as one of the most invisible, hard to detect, and devastating threats in life insurance. In fact, Reinsurance Group of America, Inc. reports that synthetic identity fraud alone accounts for $30 billion in life insurance industry losses annually, representing up to 85% of identity-related fraud cases.

What is Synthetic Identity Fraud?

Unlike traditional identity theft, where someone impersonates a real person, synthetic identity fraud involves creating a new, fictional persona using a blend of real and fabricated data. For example, a valid SSN may be tied to a fake name and birthdate. These identities are often cultivated over time, accruing credibility that passes standard verification.

The U.S. Government Accountability Office has described the process: fraudsters take real SSNs, often using unassigned or randomized ones, and pair them with entirely fictional personas to defraud institutions. In a digital world accelerated by generative AI, this issue has exploded, allowing fraudsters to create polished synthetic identities in minutes.

Why Life Insurance is a Prime Target

Life insurance has a unique position in fraudsters’ schemes. High-value payouts, extended timelines, and streamlined application processes create a perfect storm for synthetic identities to flourish. Here’s why:

• Accelerated underwriting programs lower detection barriers. Modern carriers increasingly rely on simplified and automated underwriting that uses fewer touchpoints and limited documentation. While this speeds up customer onboarding, it also opens the door for synthetic identities to bypass traditional checks.
• Premium payments build a façade of legitimacy. A classic tactic in synthetic identity fraud is to establish a consistent payment history. Fraudsters may pay premiums over months or even years, creating a false sense of credibility. By the time they submit a death claim, the synthetic identity looks seasoned and trustworthy.
• Vulnerable SSNs, especially those of children and the elderly, are prime targets. Children’s SSNs often go unused for years, and many seniors don’t actively monitor their credit. Fraudsters exploit these blind spots to anchor synthetic identities in data that’s authentic yet unmonitored. According to Carnegie Mellon’s CyLab, children’s SSNs are 51 times more likely to be used in synthetic identity theft. 
• Large, delayed payouts give fraudsters both time and reward. Life insurance claims can take months to process and often involve six- or seven-figure sums. This delay gives fraudsters a window to move money and cover their tracks before audit triggers.
• Fraud emerges at the claims stage, not the application. Synthetic identity schemes are designed to pass initial checks and only “strike” when the death benefit is paid, making detection more challenging.

Synthetic Identities & Life Insurance Fraud Red Flags

Classic life insurance fraud red flags apply, but synthetic ID fraud demands a finer lens. Here’s what to watch for:

• Data mismatches across PII fields (SSN, DOB, address)
• Multiple applications from the same person across carriers
• Unusually clean applicant profiles: no medical records or minimal credit history
• High-risk demographics—elderly or children with unused SSNs
• Behavioral oddities, like multiple submission attempts with slight PII adjustments

Tools to Detect & Defend in 2025

Staying ahead of synthetic identities and life insurance fraud requires more than sharp instincts—it demands a layered toolkit that can match the speed and sophistication of the threat. In 2025, leading carriers are integrating prevention measures at every stage of the policy lifecycle, starting from initial application to post-issue monitoring and regulatory collaboration.

On the front end, the following tools can help carriers detect fraud:

• MIB in-force checks help carriers identify applicants who already hold policies under the same or suspiciously similar identities.
• Biometric verification, such as facial recognition or voiceprint matching, adds a human authentication layer that’s difficult for fraudsters to replicate, even with generative AI.
• Device and IP logging track the digital fingerprint of applications, flagging cases where multiple identities originate from the same device or location.
• Velocity checks, which measure the frequency and timing of applications, can expose mass-submission fraud attempts in real time.

In the post-issue stage, when synthetic identities are most likely to “activate” during claims, carriers are taking the following steps:

• AI-driven identity resolution platforms use machine learning to detect inconsistencies across massive datasets, linking identities that might otherwise appear unrelated.
• Cross-carrier data sharing agreements—what slips past one insurer’s filters may be flagged by another’s records.
• Forensic document review—combines human expertise with AI to spot subtle digital manipulations in death certificates, medical records, or beneficiary documentation.

On the regulatory and industry level, collaboration is intensifying. Shared fraud data hubs allow insurers to contribute and access intelligence on emerging schemes. The National Association of Insurance Commissioners (NAIC) and the Coalition Against Insurance Fraud have amplified calls for joint action, encouraging carriers to integrate their SIU teams into broader fraud intelligence platforms. Government regulators are also stepping in, deploying multi-factor identity verification in public benefit programs to block synthetic identities before they can be leveraged in insurance or financial fraud.

As NAIC forums have highlighted, the key to success lies in closing the information gaps between carriers, regulators, and law enforcement. Synthetic identity fraud is a moving target, but with layered defenses, advanced analytics, and open channels for data sharing, the life insurance industry can shift from reactive response to proactive prevention.

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Check out our sources:

Carnegie Mellon University CyLab. Synthetic Identity Fraud: The Children’s Social Security Number Vulnerability. Carnegie Mellon University, 2020, https://www.cylab.cmu.edu.

Coalition Against Insurance Fraud. Insurance Fraud Facts and Statistics. CAIF, 2024, https://www.insurancefraud.org/fraud-statistics.

Government Accountability Office. Identity Theft: Agencies Need Better Guidance to Reduce Fraud Risk in Federal Benefit Programs. GAO-21-208, U.S. Government Accountability Office, 2021, https://www.gao.gov/products/gao-21-208.

National Association of Insurance Commissioners. Synthetic Identity Fraud: Emerging Threats in Insurance. NAIC, 2023, https://www.naic.org.

Reinsurance Group of America, Inc. Life Insurance Fraud Trends Report. RGA, 2023, https://www.rgare.com.