Pensioner Susan Murphy failed to notify Prudential when her husband Albert Betts died in May 2003 and continued to receive £332 a month from his annuity policy, which should have ended on his death.
Murphy, 65, a retired legal secretary of Martin Street, Normanton, admitted defrauding a total of £53,894 from Prudential over a period of 13 years from May 2003 to October 2016.
The court heard Prudential conducted a review in September 2016 and discovered Mr Betts had died in May 2003.
Prosecutor, Amy Earnshaw, said that when Prudential asked Murphy for a copy of the death certificate she said that she was upset with the accusation, and that he had not died and demanded the payments be reinstated.
A probation officer told the court: “She tells me she is struggling with debt and has sought debt counselling.
“She has a long standing gambling habit of over 20 years. She tells me she has had periods of time where she doesn’t gamble.
“She described the pull of the bright lights and gaming machines, mainly one-armed bandits.
“She expressed remorse for her actions and described them as being stupid and burying head in the sand when it comes to financial management.
Mitigating, Robin Frieze, said: “The fact that she is in court at all is frightening and shameful to her.”
Recorder Tom Little handed Murphy a two-year prison sentence, suspended for two years.
Recorder Little told her: “I am just persuaded that is appropriate in this case to suspend the sentence of imprisonment.”