Insurance is a necessity in this day and age, but that doesn’t make the process less complicated. You cannot trust every agent you meet to be on the up and up; some may have their ideas of how to make money out of your misfortune. In addition, scammers are constantly coming up with new ways to pressure you into losing money. To avoid being duped, follow these steps for common life insurance scams and how to avoid them.
1. The “Policy Discounter.”
The “Policy Discounter” approaches you to show their policy pamphlet at a community event, such as a church club or sports gathering. They’ll quickly suggest that you need to be part of their “group” to save money.
You can do things to keep an eye on brokers and agents that come around asking for the business. You can call or email the Better Business Bureau (BBB) in your state and request an independent review of an insurance agent and broker.
2. The “Policy Renter.”
The “Policy Renter” has a great deal, but you need to rent the policy. As with the discounters, you’ll be pitched a line about how good the plan is and for your benefit.
This scam is so common that it has its name: Rent-to-Own. The problem with purchasing a life insurance policy from a rent-to-own company is that you aren’t purchasing what they’re selling. Instead, you’re essentially renting the policy for a monthly fee that you don’t need. You can avoid this scam by reading the policy’s fine print before you sign anything and making sure you know what’s included.
3. The “Bargain.”
Through some advertisement, you’re told that you can get a policy for low, low prices, cheaper than you’ve ever seen. You’ll be shown an attractive policy with great coverage and benefits, but this is just a trap.
You’ll hear different names for these tactics, but they are all essentially the same, a low-ball offer that doesn’t reflect the true cost of your policy. Be sure to know what you’re signing up for before pressing “submit.” You can hire a life insurance lawyer to review contracts and check for any errors that may have been made in your contract.
4. The “Return-to-Sender.”
You receive a letter from an insurance agent, and suddenly the policy isn’t insured anymore, or the premium is too large, or there are some other things wrong with the plan. If it seems too good to be true, it probably is.
This is a common scam. Do not believe this if you hear it; just like with the “Bargain,” it’s a ploy to get you to sign something without considering the long-term ramifications of what you’re buying. Read everything in your life insurance policy before signing up, and make sure that it reflects your needs before signing on the dotted line.
5. The “Inspector.”
The “Inspector” springs up at your door, claiming to be there to inspect your insurance policy for any problems. You allow them in; they look at your policies and then give you some bad news. You’re not insured anymore, or the policy is expired, and now you need to pay an extra fee to keep your policy going.
You can avoid this by knowing exactly what you have with your policy before anyone comes knocking on your door. Ensure the inspector shows you in writing that the insurance is still active and hasn’t expired yet (you can confirm this with your insurance company before letting them into your home).
6. The “Special Dealership.”
The “Special Dealership” has a million policies, and they’re all a great deal. They’ll tell you they’re having a special on insurance, have some great life insurance tips, or tell you that so-and-so is happy with the policy and will vouch for them. You’ll be pressured to purchase immediately.
Many places out there offer names of people who’ve recently purchased life insurance policies through their company and are willing to vouch for them. Before you decide to work with one of these, do a little research and see what they have to say.
7. The “Replace.”
A family member passes away, and suddenly the policy has expired, the premium has gone up, or the coverage isn’t what you thought it was. You’ve bought a life insurance policy on someone’s behalf, and now you have to replace it. This is where all of those tactics come in handy — there are a lot of them out there.
Most of the time, you can avoid this by calling your insurance company and verifying that the policy has not expired yet or is a little outdated. If it is, ask to have it changed and then purchase the new one from a different company.
It’s important to note that these scams exist no matter what insurance policy you have. If you’re still unsure about a company, ask around and see what people have to say. You can choose to work with someone good for you and your family or stick with the trusted companies. It’s your choice.
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