Which type of insurance product is particularly vulnerable to being used for money laundering?

Whole life insurance is particularly vulnerable to being used for money laundering due to its cash value component and the ability to borrow against the policy. This type of insurance remains in effect for the insured's whole life, as long as premiums are paid, and it accumulates cash value over time. This cash value can be withdrawn or borrowed against, providing an avenue for illicit funds to be integrated into the financial system.

Money launderers might utilize whole life insurance policies to obscure the source of the funds by making payments on the premiums and later accessing the cash value without raising suspicion. The long-term nature of these policies allows for sophisticated schemes to develop where illicit funds can be legitimized.

In contrast, term life insurance does not have a cash value accumulation feature and typically only provides a death benefit if the insured dies during the term of the policy. This makes it less attractive for money laundering purposes. Health insurance and property insurance also lack mechanisms for accumulating cash value that could be exploited in a similar manner, thereby making them less susceptible to being used in laundering illicit funds.