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How to Avoid Common Life Insurance Scams and Frauds

How to Avoid Common Life Insurance Scams and Frauds

Insurance fraud is quite a serious crime, and a growing concern in many countries around the world. Apart from affecting millions of victims each year, these scams also tend to cost consumers millions more in the form of higher prices for products and services, as well as increased insurance premiums.

And while the exact impact of insurance scams is difficult to measure, it can be reduced if consumers remain vigilant and informed.

To that end, here are some efficient ways you can stay safe and avoid common insurance scams and frauds:

Be a more informed consumer

Insurance premiums can be a large expense for most, and it can be incredibly easy to simply jump at the lowest, most attractive opportunity.

However, it’s important to remember that any offer that sounds too good to be true usually is.

Insurance premiums are calculated using a specific set of guidelines, and will only vary slightly depending on the provider.

Aspects such as the degree of involved risk and your previous claims history will always be important, with the higher risk often coming with a higher premium as well.

For instance, a race car driver will likely have to pay more than a librarian for a similar life insurance policy, as the degree of risk involved is significantly higher.

Get to know your provider

At times, consumers can be scammed by unscrupulous insurance companies and brokers, and only realize months or years later when they are unable to make a claim. In an effort to avoid this, it’s essential to only deal with authorized, licensed, and reputable insurance providers.

In most cases, you can easily check the legitimacy of a company or agent simply by visiting your local government’s website and relevant organizations.

Similarly, insurance brokers also have to carry proof of being licensed in many countries across the globe, and you have every right to ask to see their licence if you aren’t certain of their credibility.

Avoid unnecessary add-ons

Even if you are certain you are working with safe and trusted companies, insurance agents have still been known to use questionable sales practises in order to upsell their policies.

For instance, many insurance providers have sold Guaranteed Asset Protection (GAP) insurance along with car loans.

While this add-on might be beneficial to some by offering coverage in the event of total loss, GAP insurance is quite useless and unnecessary to most consumers. Fortunately, many were able to claim refunds on GAP insurance successfully, but that situation could have been avoided if consumers had read the fine print more attentively.

Carefully read the documents

Apart from noticing any add-on insurance that might have been sold to you unknowingly, reading your documents carefully can also allow you to understand other important details more clearly.

Your insurance policy will state the specific product and coverage you have chosen, the premiums you have agreed on while talking to your insurance broker, as well as the payment plan you have decided on together.

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As these are all quite essential aspects of your insurance plan, it’s incredibly important to read all of your documents before signing, paying special attention to the fine print and the smaller details, in an effort to identify anything that might cause issues in the future and ensure you are going to receive exactly what you signed up for.

Fill everything out yourself

When buying an insurance policy, it’s also crucial to fill out all of the related documents yourself, whether you are applying for insurance online or in person. This will allow you to prevent your important personal information from getting into the wrong hands, and it will also ensure you will receive the agreed-upon policy and coverage.

What’s more, even filling out forms could help you determine whether the company you are working with is legitimate, as long as you don’t notice any spelling mistakes, typography and formatting inconsistencies, factually incorrect information, or other types of misrepresentation in the document details.

Never pay for insurance in cash

No authorized insurance company or agent will ask their customers to pay in cash. In most instances, insurance policies are paid for in checks, bank transfers, card withdrawals, and other similar forms of payment.

To verify that the account you are transferring money to is the correct one, keep in mind you can always call your insurance provider’s customer support or even visit their establishments in person.

In case you’re using online banking solutions for your insurance payments, make sure to stay safe by only connecting to secure networks like your home Wi-Fi, in order to prevent your personal data from being stolen when using unsecured public networks.

Unfortunately, insurance frauds and scams are quite a common occurrence. However, consumers can still stay safe and protected simply by remaining alert and informed, and by following the helpful guide mentioned above.

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