Life insurance fraud is a dark eye for life insurance companies and life insurance customers. Both parties have committed life insurance fraud and will reappear – especially because, sadly, fraud is on the rise, according to most statistical measures.
The non-profit organization's research against the Insurance Fraud Coalition concluded that life insurance fraud for all parties cost an average of $1,650 a year and increases life insurance premiums by 25%.
Life insurance companies usually commit insurance fraud in the form of their agents "stirring." This is a new policy that the agent attempts to cancel your existing life insurance policy and replace it with the “juice” or cash value payment in the existing policy. Agents can earn more commissions for themselves without having to look for new business prospects. Agitation can lead to an increase in customer premiums and will obviously lower their cash price.
However, another type of insurance fraud implemented by an agent is referred to as "windowing." This is when the signature of the customer or the applicant cannot be obtained on the necessary documents but the signature has been signed elsewhere, the agent keeps a signature file behind the unsigned document and presses it on the window to pass the light. And use the pen to leave traces on the signature to falsify the signature of the client or applicant.
When big-name insurance companies let their agents do bad things, it makes headlines, but the truth is that the public is more guilty than insurance fraud, not a company. Of course, making false statements is the thing they do the most, which is why all claims for life insurance death benefits are subject to investigation.
However, false background or financial income information is another form of insurance fraud that consumers often participate in. Their medical history or income may make them feel embarrassed, or they may realize that if they tell the truth, their insurance coverage will be reduced, or their promotion will be very high. If the life insurance company finds someone lying at the time of application, they have the right not to pay the claim or pay the full death benefit according to the circumstances and policies.
However, buyers of life insurance can take steps to protect them from insurance fraud because they do not have the vast amount of investigative resources that life insurance companies do.
Remember, when it comes to life insurance, if it sounds too good to be true, that might be the case. There is no free lunch.
Save all your life insurance paperwork, including a receipt for every penny you provide, and never ignore any notice from your life insurance company.
Life insurance is never free, it's not a pension plan, although some policies can indeed be self-funded – but they never started in this way.
Never buy any insurance that you think is often unnecessary, don't let yourself be under pressure, and don't borrow money to fund life insurance.
Although it can be part of a portfolio, life insurance's number one role is to prevent accidents – most people do not need life insurance in their later years. It is temporary.