Some people exploit misunderstandings about insurance standards and laws in many ways. These people may post advertising online (the most common), advertise on hand-lettered signs, go door to door selling insurance policies, have a stand at an insurance fair, or even share information in public places. This information might be false in a bid for them to commit insurance fraud. We should always be cautious with any insurance information we consume and make sure that it is legitimate to avoid a scam. Here are some of the most common insurance scams everyone should know.
You might also want to read up on some of the most common health insurance fraud trends, including those which have been prevalent during the Covid-19 crisis.
Photo by Andrea Piacquadio
Medical Insurance Card
Some agents will offer people a medical insurance card that has minor discounts but leaves large payments to them. These agents often call this protection or coverage, but it is not. Sometimes, the agents mislead people into believing that they will get a percentage of discounts for healthcare services. However, one should be very careful because discount plans are not part of the healthcare insurance policy coverage.
Always do your research, check the business and online reviews, and know what you’re getting yourself into.
Overselling a Policy
Insurance agents work on commission. This means that they earn more when selling a higher-priced policy than the standard policies. Even though upselling a policy might not be necessarily a scam, consumers end up paying more money for a plan than they should. For example, when it comes to life insurance, some agents are tempted to add a double indemnity rider. This promises to have your survivors given a double pay if you die in an accident. The catch here is the fact that you will be paying extra for the entire term of your policy.
Insurance Agent Fraud
Some insurance agents steal directly from their clients. They do this by setting aside money from a policy for themselves. Sometimes, an insurance agent might quote a premium to a customer, and they fail to set up the policy with the insurance company. If the client does not call or maybe visit the insurance company’s office, they might never know that the policy was never set up until years later when they file a claim. In other cases, the agent might quote a price higher than the actual cost of the premium and keeps the difference. You are supposed to confirm rates offered to you by calling the insurer or even visiting their offices and talking to someone else about their policies.
Another useful reason to go back online and do your research, know what competitors rates are, and shop around. Finding the best quote that works for you is what insurance is supposed to be all about.
Churning
There are situations where an insurance agent persuades a client to switch to another policy. Well, you should know that it is perfectly legal for an insurer to offer you the chance to change to another policy as long as the benefits are more than the previous policy. An honest agent will even provide you with documentation showing you the benefits of the new policy.
However, some insurers take advantage of this and persuade their clients to switch to other policies that have fewer benefits than the previous policy. Although this is illegal, some insurers still do it.
We see this all the time with communications companies and mobility providers.
Fake Insurance Websites
This is an online scam that has a fake website posing as an insurance company. These scam websites often allow clients to sign up and select policies online without meeting any insurance officials. They also promote cheap rates compared to their competitors and make sure that it is straightforward to register and choose a policy. When a client signs up, they are required to provide their credit card or bank details. When you give them this, you end up losing money.
You should always be very careful when choosing an insurance policy and even talk to different professionals about policies that are offered to you. This way, you will be able to avoid being scammed, are informed about what is going on within the industry and thus can make the right choice for you, without breaking the bank.
Jessica Alexander
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