The woman had said she was cutting tree branches when she cut off her left hand near the wrist. Family members left it behind when they rushed her to the hospital to make sure doctors would not be able to reattach it.
But the hand was recovered by police and doctors were able to sew it back on, the AP reported.
The incident happened in January, ABC News reported. Police said the family taken out five different insurance policies before the incident, the AP reported.
None of the insurance money was paid, however, since police said they "discovered the fraud in time," the AP reported.
The woman faces up to eight years in jail if convicted of insurance fraud, the BBC reported.