A good life insurance policy brings peace of mind since you know your loved ones will be well provided for in the event of your death. However, searching for a significant enough policy at lower prices can be stressful, mainly when scammers frequently target the market. Truth to tell, per the Coalition Against Insurance Fraud (CAIF), life insurance scams is one of America’s biggest crimes, costing US consumers $80 billion each year.
It is possible, however, for consumers to arm themselves against con artists and unscrupulous agents. This guide will help you identify the commonly prevalent forms of life insurance fraud if you’re shopping for life insurance. We’ll also be sharing tips on how to protect yourself as well as explain what to do if you become a victim of fraud.
Kinds of life Insurance scams
Diverse life insurance scams and dubious sales tactics have come up over the years, impacting specific groups more than others. Below are a few of the most common types.
Overselling a policy
Life insurance agents usually work on commission, implying that they have an incentive to sell you a higher-priced policy. As a result, consumers often do end up paying more than they should, even though upselling your policy isn’t necessarily a scam.
The insurance industry’s dirty little secret is this – they don’t have to disclose commissions on any products they sell to consumers. If a consumer does not ask, they have no obligation at all to tell.
One thing some of these agents may try foisting upon the customer would be a double-indemnity rider. The latter could promise to pay your survivors double if you die in an accident. Past a certain age, accidental deaths are less likely relative to an illness-related death. The implication is that you’ll be paying extra for all of those years you manage to avoid dying accidentally.
Another extra to steer clear of is the waiver of premium rider, which promises to keep your coverage going if you’re suddenly disabled. This is yet another thing that is statistically not likely to happen, particularly during a policyholder’s working life. In both instances, the customer takes a chance on something that is somewhat chancy even as the life insurance agent misappropriated a higher commission.
Insurance Agent Fraud
Per the Coalition Against Insurance Fraud, most insurance agents and companies are ethical, honest and trustworthy, but crooked agents and bogus insurers do exist. Insurance agents steal straight from clients in rare cases, setting money aside from a policy for themselves. This is realisable by quoting a premium to a customer for a policy that is never set up. If the victim calls to check up on the policy, the fact that a policy was never put in place would be discovered in time. Unfortunately, that kind of good fortune is hard to come by.
In some cases, the insurer quotes a premium that exceeds the actual cost, keeping the difference. Victims of any age can fall prey to insurance agent scams, although it is the lot of the elderly to attract scheming attention from finaglers. These unsavoury insurance agents pray for unquestioning customers.
A customer having signed with an insurance agent, that agent has all of the information necessary to tweak features or draft new policies under that person’s name. These agents realise that many customers don’t periodically revisit their policies. Rather they are content with merely paying the premiums when they’re due.
Some agents sneak up to customers with the offer to supplant an existing policy with a new one of equal or greater value. The policy may be with the same insurance company or a new insurer, but in either case, the actual value of the life insurance is far less than the original policy. An agent who hints a customer to switch to a more valuable policy for the same or lesser premium is well within their legal rights to do so, provided the change benefits the insured.
But when a customer is duped into switching to a less valuable policy, the practice is illegal. When a policy is superseded, an honest agent will provide documentation that delineates the advantages of the new policy, then have the customer conform to the changes. When an agent forces change without supporting documentation or detailed information, consumers ought to be suspicious.
Identity theft scams
Close to half of all data breaches relate to some stolen identity. Life insurance is one of the diverse ways swindlers collect personal information on their victims, using that information to open accounts and make purchases. For example, when identity theft scams concern themselves with life insurance, the customer hands over crucial information that can then be applied to open new accounts and purchase items using the victim’s contact information.
A victim of this scam will receive some communication from a person claiming to work for their life insurer. The person could well use one of the following excuses:
- A relative has passed away, leaving money to the consumer. The criminal will then angle for financial account information or a social security number to facilitate payment.
- There’s a glitch with the customer’s insurance policy, and the caller needs some vital information to fix it.
- The customer’s life insurance payment is overdue. The caller can process payment, provided the customer merely gives a credit or debit card number.
In the days immediately following this communication, the victim may be clueless their identity has been stolen. The criminal may use the credit card number to make purchases. If the information is used to open new bank accounts or credit cards or to purchase large items like a car, the consumer may find that corrective action is much more complex. A stolen identity can severely trammell a person’s credit, leaving the victim encumbered with remedying the situation with diverse credit bureaus.
There’s no call for you to give evidence of gullibility by paying needless heed to insurance agents no better than ordinary scammers. But, though they are not numerous, you must still be prepared whenever you might cross paths with them. The wiles and skulduggeries of these habitual practitioners of misdemeanours are easy to get the hang of. Precautions against life insurance scams will keep you safe.
Should you need assistance, however, Fast Action Refund (https://fastactionrefund.com/) would gladly help.