Clean Sheeting

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DEFINITION of 'Clean Sheeting'

The fraudulent act of purchasing a life insurance policy without disclosing a pre-existing terminal illness or disease. This type of fraud is often done with both the knowledge of the purchaser and the agent involved.

INVESTOPEDIA EXPLAINS 'Clean Sheeting'

In cases of clean sheeting, the policy is often sold shortly after it is purchased in a viatical settlement, but the money received is a lot less than what a legitimate settlement would yield. This is because there is a higher chance that the fraudulent policy will be rescinded. This type of fraud provides huge gains for the person who buys out the purchaser because he or she is able to buy the policy at a large discount, somewhere around 10% of the policy's face value.

RELATED TERMS
  1. Viatical Settlement

    An arrangement in which someone with a terminal disease sells ...
  2. Life Insurance

    A protection against the loss of income that would result if ...
  3. Viator

    A person with terminal or a life-threatening illness who sells ...
  4. Face Value

    The nominal value or dollar value of a security stated by the ...
  5. Accounting Error

    An error in an accounting item that was not caused intentionally. ...
  6. Terminally Ill

    A person who is sick and is diagnosed with a disease that will ...
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