Was 'The Staircase' murder really about life insurance?

The killing, now dramatized in an HBO Max series, may have been sparked by a $1.4 million life insurance payout.

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Lisa Rabasca RoepeContributing ReporterLisa Rabasca Roepe is a contributing reporter at Policygenius, where she covers personal finance and insurance news. Her work has appeared in The New York Times, Fast Company, Wired, Business Insider, Quartz, The Atlantic's CityLab, and the Boston Globe.

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It’s been 21 years since novelist Michael Peterson was on trial for the murder of his wife, Kathleen, but the case is still capturing the public’s attention—most recently in an HBO Max series, “The Staircase.”

In December 2001, Peterson called 911 to report he found his wife unconscious at the bottom of the stairs in their Durham, North Carolina, home. Peterson told the police that he and his wife had been drinking, and his wife took a sleeping pill and had likely fallen down the stairs. The police didn’t believe him and arrested him for her murder. 

Peterson’s case has been the subject of a French 2004 documentary miniseries, also titled “The Staircase,” as well as many true crime podcasts and four books, including two written by Peterson.

“It’s a perfect storm of all the true crime tropes,” says Brooke Cain, a reporter for the News & Observer in Raleigh, North Carolina, who has covered the case for years. “When I’m asked why are so many people interested in this case, I say, ‘Who wouldn’t be? This case has everything. Murder, sex, and money.’”

The case has an abundance of twists and turns. During its investigation, the prosecution discovered that a close friend and neighbor of Peterson’s, Elizabeth Ratliff, the mother of his two adopted daughters, Margaret and Martha, was also found dead at the bottom of a staircase in Germany in 1985. 

The case also involved the potential for a large life insurance payout. Kathleen had a $1.4 million life insurance policy, which was due to be paid to Michael in the event of her death. Prosecutors said Peterson was hoping to use the payout to address his debt [1] , including $143,000 in credit card debt.

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Life insurance & murder

Peterson signed away any claim to the life insurance proceeds during the trial. However, because of the slayer rule, Peterson wouldn’t have been able to collect any money. Under the slayer rule, anyone suspected of murder or plotting a murder is prevented from benefiting from the dead person’s life insurance policy. Instead, Kathleen’s biological daughter, Caitlin Atwater, and her daughter's father, Fred Atwater, received the money. [2]

In the scope of insurance fraud, life insurance murders aren’t a huge occurrence but they do happen, says Matthew J. Smith, executive director of the Coalition Against Insurance Fraud. For instance, in 2017, Joaquin Shadow Rams Sr., was convicted of killing his 15-month-old son for insurance money. Rams had taken out a $500,000 life insurance policy on the boy soon after he was born, which Smith says, should have been a red flag. [3]

The amount of life insurance on Kathleen Peterson wouldn’t have raised any eyebrows, Smith says. However, insurance agents need to pay attention to what people are saying, or if anyone is voicing a concern. “If someone says, ‘My marriage isn’t going well,’ and then their spouse buys a large life insurance policy, that is the type of indicator that people need to come forward with to protect a life,” Smith says.

The insurance industry trains underwriters, agents and claims teams on potential red flags to prevent life insurance fraud, Smith says. “It might not be a murder but it could be identify theft,” Smith says.

In the end, Peterson was found guilty of Kathleen’s murder in 2003, but was granted a new trial in 2011 when it came to light that a prosecution witness gave false testimony. Peterson took an Alford plea to settle the case in 2017 — basically acknowledging that there was enough evidence to potentially convict while minimizing any criminal penalties. He was freed from prison after serving 89 months behind bars.

Peterson still lives in Durham, according to Cain, who occasionally corresponds with him. “If you like true crime, this story has everything that keeps one interested,” she says.

Image: Courtesy of HBO Max