Phony life insurance fraud is perhaps the most sensitive type of insurance scam, as the largest frauds are often discovered only after the death of the insured. Although buyer frauds are very common, and can even lead to the murder or suicide of the insured to collect on their insurance, this article focuses on seller fraud, where those who sell or claim to sell insurance are involved in the fraud.
Fake websites and agents
These exist with the sole intention of obtaining money from an unsuspecting person, usually through credit cards. The websites may be designed to look like those of a genuine insurance company, or they may represent a completely bogus organization. These can be recognized in a number of ways, the easiest of which is to check if the web address begins with https://; this is a secure site and payment information can be entered here. Links to fake sites will often be emailed to you, so check to see if the email is coming from a public account or from your insurance company account. Also, hovering your mouse pointer over a link in the email will tell you if the email was sent from the same site and not a fake one. It’s important to remember that no bank or insurance company will tell you to “renew information” via email. If you receive such an email from your bank, please verify by calling them, not the number in the email!
Fake agents are a bit more difficult to spot, as both the real and the fake will approach you personally and advertise policies. The thieves collect the premiums and do not pass them on to the insurance company. As a general rule, check with your company beforehand to see if they have policies and if they have sanctioned agents to collect premiums.
shell companies
These “companies” are really just groups of scammers operating out of a single room, marking their targets and selling them policies, claiming to be certified or licensed. The smart thing to do is check with your state or national insurance department to see if these companies exist. As always, don’t hand out credit card information over the phone and ask for any insurance scam news.
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This involves unsolicited sales or advertising policies with the intent to generate commissions rather than genuine customer benefits. For example, an annuity plan that generates cash but only after 15 years is unlikely to be popular with people in their 60s. Hiding the drawbacks of this plan, which often includes paying large fines or ransom fees to get paid sooner, often involves.
Similar to beating is selling plans that over or under hedge the customer, just to generate commission for the broker. The best way to avoid this type of fraud is to manage the account independently, without allowing brokers discretionary authority over purchasing policies.
Insurance companies have the services of surveillance investigators and often an in-house insurance fraud investigation unit to help them tackle buyer fraud, but you’ll have to make do with common sense and vigilance. There is no such thing as “extremely careful” when it comes to your financial affairs, especially life insurance!