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Suppose a person has life insurance and goes missing while the policy is valid. His body is not found, no one saw anything which would be an evidence of the person death. Suppose going missing is not an exception to the policy, so some time passes to be sure that the person is indeed missing and the insurance company pays.

Ten years later the person is back. What happens? Is an investigation started by the insurance company? Does it request the money back?

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    What country? There are specific rules that would declare a missing person dead. And yes the money needs to be paid back. – Dheer Jan 25 '16 at 15:51
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    I'm voting to close this question as off-topic because this question is too hypothetical and too much about law rather than finance. – user32479 Jan 25 '16 at 18:24
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    You have to have them declared dead. Just not coming home with no evidence doesn't get the life insurance paid out. See en.wikipedia.org/wiki/Declared_death_in_absentia though it is incomplete so things may be different in your country. – Kate Gregory Jan 25 '16 at 19:14
  • In some places, the insurance company doesn't have to pay unless a body is found. I mean a company can choose to include this clause anyway in their policy fine print. – Fixed Point Jan 25 '18 at 19:43
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There are actual cases where this has occurred. In cases where the beneficiary was suspected of knowing that the insured person was alive, they have faced fraud charges. In cases where they appeared to act in good faith, the legal consequences are less severe, but the likelihood of the insurance company to sue for their money back will depend on the circumstances and the amount of the payout.

One interesting case was a woman who abandoned her family and didn't reappear until 11 years later. The family didn't know where she was, so they probably won't end up paying back the relatively small $100,000 that they received.

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    Can you in fact remove all doubt by insuring against "the person dying or going missing and being declared legally dead"? Fundamentally, your significant other abandoning you and faking their own death isn't a completely unreasonable thing to want to insure against if you can, since either way you've lost whatever it was they contributed to their dependants. – Steve Jessop Jan 25 '16 at 17:46
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In the United States if the person insures an article and then claims a loss of that article, the insurance replaces the missing/destroyed article. If later on the item is found the original is owned by the insurance company. The person who purchased the policy doesn't get to keep both.

Of course if the item was so valuable to be priceless the insurance company would be open to an exchange of items or money.

But if they suspect fraud...then it becomes a legal matter.

Even when a life isn't involved it can be a source of dispute: http://www.artnet.com/magazineus/news/spencer/spencers-art-law-journal5-7-10.asp

INSURED V. INSURER: WHEN STOLEN ART IS RECOVERED, WHO OWNS IT?

Kenneth S. Levine

This essay is about the word "subrogation," which frequently appears in insurance policies. An insured painting is stolen and the insurance company pays the owner’s claim for the value of the painting. Many years later, when the painting is recovered, its value is many times what it was when the insurance claim was paid. The insurance company takes the position that it owns the painting, while the owner says I own the painting, less the value of the insurance proceeds received. The resolution of this dispute depends on the meaning of the word "subrogation" in the insurance policy.

When life insurance is involved, the item being replace is the lost stream of income. The question of returning money and how much would be a legal issue. They would also want to know if there was fraud, and who was involved.

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This also has relevance to to law of the land, in terms of how many years of being missing a person can be declared legally dead. Though it would vary from country to country, I am sure there would be some generic clause similar to above. Past that time a person can be declared dead. I am sure the insurance would not pay prior to the time. Post that, if the person reappears (and it can be proven, as mentioned above, that it was not a fraud), it is doubtful if the insurance can claim the money back (though, again it would depend upon the prevailing law).

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