At any given moment, a dead person could be claiming money from your firm. Failing to verify proof of life can lead to some significant losses that build up for months or sometimes years until they’re uncovered in an audit.
Proof of life verification is an essential step in verifying customer identities. This article explores this key financial check in more detail.
What is Proof of Life Verification
Proof of life verification works differently across different industries. In banking, for example, it’s common to run such checks while a large transaction clears. Pension funds, on the other hand, might audit their records every few months by checking membership against death records.
Insurers do both of these death audit verification checks, establishing proof of life before making large transactions and frequently checking death notices against customer records.
Evaluate Risk
So, what kind of proof of life verification does your company need to do? That depends on how exposed your company is to risk. If someone passes away, how could things go wrong if your system assumes they’re still alive?
Will a deceased person get repeat payments for months at a time, or will it be a one-time lump sum? If it’s a single payment, how high is the amount that pays out? By weighing up these facts, you can figure out how much verification is advisable.
In some situations, investing in proof of life verification isn’t worth it, because the cost of running checks exceeds that of taking the financial loss. In this situation, it might make sense not to invest, but make sure you’re not overlooking potential risks.
You can only come up with a workable risk model if you have the right digital data to feed into it. Establishing proof of life often involves pulling together different data feeds and comparing them. When this data is spread across different departments and uses different labeling standards, it’s harder to run reliable verification checks.
If your records are clear and organized, it can help your firm to model risk and correctly verify that clients are still alive. Chaotic systems make it much harder to match records with the right individual. When people have similar names, some systems end up merging them into a single entity, which can result in individuals being erroneously flagged as someone who’s passed away.
How to do Comprehensive Mortality Checks
Every proof of life program leans on a dependable death check. In the United States, the best source is the Social Security Administration’s Death Master File. This information is distributed to approved users by the National Technical Information Service. It holds more than 85 million records back to 1936, making it the most comprehensive source for figuring out if people in your company records have passed away.
Recent deaths require certification and a genuine fraud prevention or business reason. While the information is extensive, it’s not comprehensive. The SSA hasn’t captured every death, so the file is strong but incomplete. You can’t treat someone’s name not appearing as the risk being eliminated.
Those gaps are why most teams pair the federal file with a commercial service that checks many databases fast. A provider with nationwide death record coverage can surface state and county deaths well before they reach the federal file, closing the window where you keep paying for the dead.
How AI Can Help With Matching
So how do you stop your systems from confusing two people who happen to share a name? The latest AI systems can help through extensive data analysis. Rather than looking for an exact match, AI tools weigh up how likely it is that two records belong to the same person.
They look at things like full name and date of birth alongside any other details you have on file. That way, a small typo or a change of address is less likely to make you miss a real death or flag the wrong customer. It’s worth remembering that AI is just one tool here, supporting your checks rather than replacing human judgment.
Getting Proof of Life Verification Right
Paying people who have died is an invisible problem until an audit turns it up. Proof of life verification is how you get ahead. Start by working out how exposed you are to this risk.
Mortality checks give you your core signal, while faster sources like obituaries help fill in the gaps. Let AI take care of matching records to the right person, and handle everyone’s data with care. Keep a clear audit trail too, so you can show your working.
By getting these proof of life verification steps right, you can make sure your company isn’t making payments to the dead without causing inconvenience to the living.
If you’re interested in learning more, see our other blog posts.
