How to Guard Against Life Insurance Fraud

Availing a life insurance policy may be the one of the wisest decisions you will ever make; but not so wise for others. Since many folks are aware of the need to invest in their future and thus avail life insurance policies, there are a number of people who, in turn, perceive this as a great opportunity for a scheming venture. They continually seek those trusting people and take advantage of the latter’s lack of understanding or language, in order to steal their hard-earned money. This is a typical example of life insurance fraud. Life insurance fraud can happen to anybody. It can even happen to the best of us. This scheme has amounted to loss of billions of dollars on account of selling life insurance without actually providing actual insurance coverage to the buyer. The money goes to appropriations by the schemer.

The usual targets of this modus operandi are policy holders who have purchased the policy in good faith and for value. These policy holders rely on the representations made by the pseudo-agents only to find out that they are not insured at all when disaster strikes. One example of insurance fraud is during the widespread Los Angeles riot in 1992 where as a result of the massive acts of violence, many businessmen who have insured their business establishments against insurable risks. The violence that ensued resulted to a colossal damage to property, mostly by fire. After the occurrence of this lawless violence, some Asian businessmen made claims on account of the damage to their property by way of insurance. They were shocked to find out that their policies are not genuine and they were victims of insurance fraud.

No one desires to be scammed by such scheming opportunists. However, these scammers are out there, waiting and seeking for another person to defraud. In order for you not to be one of them, please read the following guidelines to avoid insurance fraud:

Research. In order for you to find out whether the agent is representing a legit insurance company that is licensed to do business in your area, check your state insurance department is said company is one in their listings. While you are at it, you can also verify if the agent you are speaking to is a licensed broker or agent of the said company he or she claims. Insurance companies usually post announcements about agents that are no longer connected with them. So you have to make sure that you’re not dealing with such an agent. This process may make you look paranoid but it is better to be safe than sorry. You would not want your hard earned money wash down the drain.

Who to pay. Once you have found out that the insurance company the agent represents is licensed in your state, you should issue checks or make payments in the name of the insurance company and not the agent. The standard procedure for insurance companies is they bill their policyholders according to the address they have provided. When it comes to paying your premiums, it is wiser to pay through check or credit cards. Paying by cash makes it easier for swindlers to run away with your money.

It is also important to have a check on the features of the insurance coverage being offered to you. Try to sleep on it. Rushing to get an insurance coverage or being rushed by an insurance agent can be something fishy. Make sure you read the contents of the insurance contract and ask for clarifications if you need to. This way, you can make sure that you are investing your money for all its worth.

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