Karl Karlsen had his son Levi take out life insurance policy before his death: Part 2

Levi Karlsen’s handwritten will made Karl the sole executor of his estate. After Levi’s death, the insurance company paid Karl Karlsen $700,000.
7:08 | 06/06/20

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Transcript for Karl Karlsen had his son Levi take out life insurance policy before his death: Part 2
I first met Karl at a line-dancing club. He told me that he could line dance. I was looking for a line-dancing partner. Come to find out he really had no clue about line dancing. When Cindy met Karl, she sees this physically strong, good looking, successful in her mind guy that he's, unfortunately, dealt with the tragedy of his wife. In a house fire in 1991. What he had told me about the fire was that he was able to pull the children out. By then, the house was engulfed. It had been almost two years. He was heartbroken. He loved her. I felt extremely sorry for him. I think she was yearning for the family package. He came with a package. It was pretty quick. He brought her over to the house and introduced us. And initially it was a nice change of pace. For me it was, I'm going to have a mom like all the other little kids my age have. She did initially fill that void. Cindy now is kind of the instant mother or the mother figure in their life. We were married in 1993. It turns out it wasn't so happily ever after for the Karlsen kids. Their life with Karl, as they describe it, was filled with work, chores, discipline. We did the sweeping and the mopping, dusting every day. Vacuuming. We cooked. Dad would get home and Cindy would go right to him right away. And Erin did this or Levi did this, and you need to take care of it right now. And he did. There were times when, if the kids really misbehaved, I would tell him he needed to talk to them, and sometimes I felt like he was overly strict with them. Karl was ruling them with such a tight fist, they couldn't be kids. You always had chores to do. There was always work to do. He used physical labor as a form of punishment pretty consistently. One time, I don't even know what I'd done, but he wanted me to carry 10 gallon buckets full to the brim of water back and forth from the house to the barn, and he would just watch and wait for my body to physically give out. When it was Levi, he would take him outside. My father told me that Levi was a man, so he could take it. As far as physical abuse, I did not see that. He hid it well. Levi moved out when he was 16. It became an escape for him. He needed to get out of the house. Pretty soon thereafter, he had met cassie. Levi was 18 when he had his first daughter, and then the second one came two years later. He got married at a young age, and their marriage did not work out. She was really one of the only people in his entire life that had loved him and accepted him for who he was. And losing that was traumatic for him. Prior to Levi's death, his life was on an upswing. You know, he was coming back to the farm more often. He was able to get a job with one of the factories that was in Geneva. They had insurance and stuff that he needed as a father trying to support his children. After Levi's death, the investigation was very cursory. General reports were filed. The doctor signed of on it. There was no autopsy. It gave every appearance of being an unfortunate accident. It was shortly after Levi died that Karl had told me that Levi had had a life insurance The life insurance policy that's taken out on Levi, it's beyond bizarre. Karl drives Levi, his 23-year-old son to an insurance office and introduced Levi to an insurance agent. They wanted to get an insurance policy on Levi, who had two young girls, worked in a glass factory and felt there were job hazards and they felt accidental death was a possibility. Karl convinces Levi to take on a life insurance policy worth $700,000. I didn't realize Karl actually paid the first premium. I did not know that. And he paid cash. When this life insurance policy's taken out, and the first payment is made, there's provisional coverage, but it's providing that the subject pass a medical exam. Karl and Levi did not tell the agent that Levi had a serious swallowing disorder that made it difficult to ingest food. And that he had been treated for that disorder several years before. The likelihood is that New York life would have suspended or dropped the policy or had to rewrite it once Levi's medical conditions were brought to their attention. Levi Karlsen's medical exam was scheduled for the day after he died. Even though Levi didn't make it to that medical exam, the insurance company still paid out to Karl. Dad also made a point to tell me was that Levi had left a will. This was a handwritten note? Yes. Saying what? That his father was going to be the sole executer of his estate and dispersed the money to his kids. The money he said it was barley enough to cover the funeral expenses for Levi. $700,000, that would be paying for a heck of a funeral. It turns out nobody in Karl's life knew about that life insurance money other than his wife, Cindy. When I questioned Karl, why were you beneficiary? He had told me that because Levi was going through this nasty Karl made it out to be that Levi didn't trust his ex-wife, that Levi wanted his daughters taken care of and he trusted his dad. I didn't think it was odd because Levi had worked his way back into the house a little bit more, and him and dad seemed to be getting along pretty good. I just trusted my husband. There was no reason for me to question anything. Reporter: The note says all of the assets go to the father to be handed out. Yes. Reporter: And when was the letter notarized? The day of his death. At the time law enforcement didn't know about any of this. So, once it was ruled an accident, it seemed like it was case closed. It wasn't until four years later that the investigation was reopened. Reporter: With everything that you discovered here, what then did you make of what happened to his first wife? Suspicious. I went to the house the next day, and could not, for the life of me understand why somebody didn't try to get her out. It wasn't an accident.

This transcript has been automatically generated and may not be 100% accurate.

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