The recent re-appearance of canoeist John Darwin, who had been presumed dead after the coastguard failed to find any trace of him in the sea five years ago, has prompted many questions about his whereabouts in that period, as well as a very interesting one for the UK life insurance industry; what happens if you pay out a claim on someone who comes back from the dead?

There is no indication in this case whether Mrs. Darwin has been the beneficiary of any life insurance payout, so the question is merely rhetorical. However, before finding out whether any refund would be required we must first look at how someone is declared dead, in order for the payout to be made in the first place.

A spokesman from the Association of British Insurers confirmed that a missing person would be declared officially dead seven years after going missing. But, where there is ‘compelling circumstantial evidence' of suspected death, relatives can apply to the courts earlier to have the missing person declared dead. In addition, life insurance companies can choose to pay out earlier than the statutory seven years if they choose, even in cases where a body has not been recovered, and without the need for any court action.

Although there is no uniform agreement as to what constitutes ‘compelling circumstantial evidence', most insurers are in agreement that any of the following would apply in cases where payouts for life assurance with no body recovered are being considered:

- If the likely age of human survival has been crossed by the insured
- If the possibilities of the insured being in any danger were high
- If the insured had a terminal illness or was suffering from deteriorating health status at the time of the disappearance
- If the actions of the disappeared insured are totally inconsistent with their behaviour

So, back to the main question: what happens if a beneficiary has received a payout under a life insurance policy for a missing person, and they subsequently turn up alive? Well, the answer is not that simple. According to an Association of British Insurers' spokesman, it is down to the discretion of the individual life insurance company as to whether they pursue the beneficiary of the claim for the recovery of any payout in cases when the insured subsequently turns up alive. Only in cases of clear foul play, or where fraud is suspected or proven, would they would seek to recover the insured sum, but in other cases the money could be written off as an insured loss.

So, whatever happens in the strange case of Mr. And Mrs. Darwin, it is unlikely that most who compare life insurance policies before buying examine the small print to find out whether the beneficiary of any claim would have to repay any payout, should the insured come back from the dead!
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Paul McIndoe is an online, freelance journalist and keen hillwalker. He lives in Edinburgh with his two dogs.