There are always those who look for opportunities to take advantage of the vulnerable. Life insurance also brings out scammers looking for opportunities. When you are buying life insurance, you need to be careful. There are many out there just waiting to pounce upon you and take advantage of you. There are different types of frauds that can be perpetrated on you.
For a life insurance policy to be effective, you have to pay the premium at regular intervals. Failure to pay the premium on time can result in the policy being declared void. It is a common practice amongst policyholders to make premium payments through an agent, generally the one through whom the policy was purchased. This is where many policyholders get cheated. A fraudulent agent may pocket your premium and not pay the insurance company leaving you stranded without insurance. Try and remove the agent from the picture. All insurance companies allow you to pay the premium directly to the company by check.
Churning is another fraud which can be committed by insurance agents. In churning, the agent will try to sell you an extra policy at a low cost even though you are already having a policy with a cash value. The fraud rests in the policy so meagerly priced because the rest of the premium is being drawn out of the cash value of your first policy. The new policy in due course eats up the cash value of the first policy. As a result, you will have to pay for both policies or else your coverage will lapse.
Sometimes, an unscrupulous agent may try and sell coverage which you don’t need by telling you that it is part of a package. Generally with life insurance, such agents may slide in accidental death coverage or guaranteed renewable term life insurance.
Stacking is another form of fraud that you can come across. In stacking, the agent will try to sell you pointless multiple policies, claiming that you are in need of extra coverage.
If you are a victim of such fraud, there are avenues to seek redress. Each state has an insurance department that will help you if you are a victim of fraud. Insurance companies have also made it a lot easier for victims of such fraud. Insurance companies have shown much readiness to compensate such victims. Make sure you don’t waste your time by complaining to an insurer’s branch office. Contact the main office for swift response.
