The Most Common Life Insurance Scams of 2019 and How to Avoid Them
About 68 percent of Americans have some form of life insurance and more are actively looking to buy.
Life insurance is a practical way to ensure your family’s financial wellbeing after you pass on. However, considering that insurance fraud is very rampant in the United States, it’s not uncommon for innocent people to fall victim to scammers. In fact, losses resulting from insurance fraud hit $40 billion every year.
So, how can you protect you from life insurance scams? By arming yourself with the right knowledge and staying several steps ahead of the fraudsters.
Continue reading to learn how to avoid the most common life insurance scams.
Making Payments to the Wrong Person/Company
When you’re shopping for life insurance, you can buy directly from a life insurance company or use an insurance broker. The vast majority of people prefer to use brokers, largely because these professionals have a wealth of information that can help you find the best provider.
Unfortunately, working with a broker increases your chances of being a victim of a life insurance scam. If you’re you not vigilant, a scammer can pose as an insurance broker, help you find a “good insurance company,” sign you up, and then you start making premium payments to “this company.”
Unbeknownst to you, this company isn’t a legitimate life insurance company. It’s a shady company set up by your “insurance broker,” meaning you’ll be making payments to them. It also means you have no life insurance.
Avoid this by doing your due diligence before hiring an insurance broker. If possible, get a recommendation from a close friend or relative.
If you opt to engage a life insurance company directly, do background research to gauge its reliability and reputation. For instance, if you’ve your heart on East Coast Insurance Group LLC, go online and read client reviews and testimonials before making up your mind.
Cashing Out Your Policy
You buy life insurance with the goal of never cashing it out. Your job is to pay the premiums and after you pass on, your beneficiary/next of kin will cash out the money.
However, depending on your policy’s terms and conditions, you have the liberty to cash out early.
Although there are instances when cashing out makes financial sense, you should be alarmed when a third party is pressuring you to cash out and void your policy. Perhaps this third party is a financial advisor, and they’re telling you how you can use the money to make even more money. This is a scammer’s language.
Unless you’re in dire need of money, there’s no reason to cash out your life insurance. Remember you have the option of taking out a personal loan against the policy.
Your Policy Has a Problem
Somebody claiming to be from your life insurance company calls or emails you and says there’s a problem with your policy.
Dismiss such people right off the bat. If you’ve been paying your premiums on time, there won’t be any problem with your policy. Or if you have any doubts, head over to the insurer and get more information.
In most cases, such callers are scammers looking to steal your personal information, such as Social Security Number.
Be on the Lookout for These Life Insurance Scams
No one is safe from these life insurance scams. Whether you’re a policyholder or looking to buy the policy, scammers are out to get you. But with the information fleshed out above, you’re now in a stronger position to avoid these scams.
Keep reading our blog for more useful tips and insights.