Personal Injury Lawyer Blog
When people think of insurance scams, they usually assume it is the consumer doing the scamming. That is not always the case, however. There are a plethora of dishonest insurance agents and fake insurance companies that thrive by bilking consumers of their hard-earned cash. Scams run the gamut from misappropriation of funds to collecting premiums on fake policies without any intention or ability to pay out on claims. They will offer policies at incredibly low prices to lure unsuspecting consumers into thinking they are getting the deal of a lifetime when all along they are just getting ripped-off. Knowing their tricks and what to do when you suspect you are a victim are the best ways to prevent getting swindled.
Stolen Premiums and Lapping
Agents can steal premiums by taking them from one customer and appropriating them to a fake customers account. They are then able to steal the money from the nonexistent customer account and place it in their own pocket. They use the money to feed addictions like gambling and drugs or to better their own lifestyle with luxury goods and services. They can also steal the money you give them for premiums before it is ever credited to your account.
Fake Policies
Another way an agent can steal from you is by using their own money or money bilked by lapping your policy to invest in other premiums. They then use incentive programs and bonuses from the company to cover their investments and then let the policy lapse. They may also take your money for a premium and never file the policy with the insurance company. They can even continue to steal your money as you make payments to a policy that the insurance carrier is not even aware is in existence. Forgery of customer signatures can net them access to further premiums and insurance policy cash values.
Churning Policies
Crooked agents will sometimes talk their customers into terminating the policies they have and purchasing new ones so they can earn additional commissions on new policies. They will often keep information from their customer that will cost them even more such as any money they will lose by switching policies.
Unnecessary Policies
Unscrupulous insurance agents can sell you policies you don’t need and don’t want but are paying for without their knowledge. It can add up to hundreds more on your premiums than you really need or want. Some agents will tell you it is simply part of the package and some will not even tell you it is there. Motor club memberships, guaranteed renewable life insurance and accidental death coverage are the three instances where this is easiest to pull off.
Fraudulent investment
Insurance agents can talk you into investing in insurance-like tools. One is viaticals, which is an investment in life insurance policies that are taken out on the sick or terminally ill. Viaticals are usually a legitimate investment, however they can also be fake and disingenuous. Another favorite scam among agents are promissory notes. Here agents promise quick, high and positive returns for participating in promissory notes they claim are backed by insurance companies. In reality, the promissory notes do not exist, they’re just an imitation built to steal your money.
Most insurance agents are reputable business people just doing their job but there are always a few rotten apples in the barrel. Taking the time to educate yourself on the various scams they can pull is the best way to keep yourself safe.