Avoid Life Insurance Scams Author:    Posted under: Life InsuranceLife Insurance questions answered


When we hear of life insurance scams, the first image that comes to mind is a clever villain who stages his own death in the middle of the ocean leaving his beautiful beneficiary to claim his multi-million dollar death benefit. They rendezvous at a pre-arranged secret location at midnight then hie off to some tropical island far, far away. There, they live happily ever after, once in a while chuckling at the poor fools they outwitted and eat buffets every day.

While this may be the result of watching one too many movies or television shows, life insurance scams do happen. And more often than not, they happen to simple, ordinary people like you and me. There have certainly been too many reports of people taking out life insurance policies on their relatives or friends and committing murder for the purpose of obtaining the death benefit. In this case, it is the life insurance company who gets defrauded. But beware that we, the consumers, might also become victims of life insurance scammers. The following are helpful tips of what you should be on the lookout for and steps to avoid falling prey to them:

Know your insurance agent. You don’t have to be best friends with your insurance agent, but make sure you do diligent background checks on him or her as well. Ask them the following questions:

  • Are you licensed to sell this type of insurance?
  • Do I really need this type of insurance you are selling me?
  • Is the insurance company licensed to sell in this state?

Make sure you double check his or her answers with your state’s department of insurance. No matter how kindly or professional the insurance agent may seem, never take his or her word for anything, without doing your own homework.

Determine the legitimacy of the insurance company. As mentioned above, check your state’s department of insurance to confirm if the insurance company is licensed in your state. Check their financial stability with one of the free ratings services such as Moody’s, Standard’s & Poor’s or Duff & Phelps.

Make your checks out to the insurance company, never the insurance agent. You’re never sure that your honest broker or agent won’t go bad. There have been many instances that consumers’ policies lapsed even after faithfully paying their premiums on time monthly, only to find out that their insurance agent took the payment and never sent the premium money to the insurance company. Cash payments make it all too easy for unscrupulous individuals to steal from you since there is no way for you to prove that the payment was made. It would be preferable to issue check or credit card payments directly to your insurance company.

Know your policy and the life insurance products you’re paying for. This is imperative even before you sign up for any policy at all. Make sure it you are not signing up for coverage you neither need nor want. Some insurance agents may try to sell you additional products that may not be in your best interest so you have to make sure you are not being charged for extra.

Watch your bill. Examine the statements sent to you by your insurance company regularly. These should contain a breakdown of the coverage you purchased. Compare this with the paperwork you have to ensure that you are getting what you purchased from your insurance agent. If the bill goes up mysteriously and without warning, call your insurance company and ask for an explanation.

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