Signs Of Insurance Fraud, and How To Protect Yourself

Article Posted by Expert Author: Adam Foley  on 09/03/2013

Life insurance fraud is, unfortunately, very common, and very costly. But getting smart about life insurance fraud begins with you. So before you start looking for insurance options, keep the following in mind.

Be Cautious When Searching Online

If you're searching for coverage using the internet, take extra caution. There are many fraudulent agents online looking to scam innocent coverage hunters. One sign of a fraudulent agent is that they may attempt to offer you quotes on your coverage that are ridiculously low.

Your premiums can be easily stolen if you can't confirm the trustworthiness of the company who is collecting your premiums. Check the payment company with the BBB before you submit your credit card information or send a check.

Always Get A Second Opinion

It's never a good idea to choose the first life insurance company you see. But if you are considering doing this, asking a trusted third party to review the policy being considered and tell you if they see any inconsistencies or things that don't sound right.

Go Over Insurance Statements With A Fine-Toothed Comb

Even if you've chosen a policy from a quality and trusted provider, experts recommend reviewing your statements each month to ensure that you are receiving the coverage you have been paying for. Be aware of any changes, such as your statements being received from the firm of an agent instead of from the agent directly, as this is a red flag. Some agent firms can be very creative with statements, and make it so that you only see what they want you to, and little else.

Watch For Warning Letters

Did you receive a letter warning you of an impending lapse in your coverage from life insurance companies in Chicago or another city? If so, you could be the victim of fraud. Ensure that you keep a strict record of when, how and where you made all of your premium payments.

Watch Out For Scams Like Stranger-Owned Life Insurance

If you hear the term 'stranger-owned life insurance', run the other way. This is a scam where a person who a policy holder does not know owns their policy. But unless you've had the policy for a period of two years, an insurance company may come after you. Scammers know this, and so will offer to give you money for the cost of the policy, or offer to give you the money so that premium payments can be made for those two years.

The deal goes something like this: should the policy holder die before two years has expired, the family receives the benefit and uses a portion of those benefits repay the loan received to buy the policy in the beginning. If you haven't died, there are usually three options.

The first is to keep the insurance policy but repay the loan with interest. The second is to sell the policy and use that money to repay the loan. The third option, which scammers hope you will accept, is to pay nothing on the loan for the policy and transfer it to the lender, who then becomes the beneficiary.

Because of the big potential payout, a scammer will usually seek out an elderly person to try and deceive.

The reason this type of scam doesn't benefit you is because first, if you repay the loan, you have no money. The second reason is that if you choose to sell your life insurance policy or transfer it to the lender, you may not be able to be insured by a legitimate company in the future.

There are tried, tested, and trusted life insurance companies that are safe to do business with online, names that you recognize and can verify through various means.  Doing a little due diligence up front will protect you from fraud.


Article Posted In:  Consumer & Industry News  Life Insurance Companies  

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