Insurance scams occur all the time and usually the elderly are the targets of this malicious, financially harmful actions. Most insurance scams in the 2000s are happening within annuities and life insurance policies.
The unfortunate part of these scams is that the agent is typically at the center of the scam. Whether or not they are peddling products that benefit themselves with a high commission as opposed to a product the customer actually wants or needs or if they are manipulating the facts in order to make the sale, the agent is typically at fault.
The Fake Life Insurance Company Scam
One of the oldest tricks in the book is the fake insurance company. Criminals will create elaborate lengths to create bogus companies, but once you hand over the dough, don’t be surprised to see the company, and the money disappear. Customers need to at least go online and ensure the company you are dealing with is a legitimate company.
Two Tips When Opening a Life Insurance Policy to Avoid Getting Scammed
- Ensure the company is legitimate
- Make the check payable to the company, not the agent
Annuity Insurance Scams
Another financial area that is filled with scams is Annuity insurance. Two common types of annuity scams are:
- Twisting – the agent convinces an elderly client to invest in a pricey annuity that they have to hold for over a decade or pay a severe penalty. Agent gets a fat commission, client gets stuck with a nearly worthless product.
- Churning – The Agent gets the client to change from one annuity to another just to get a commission regardless if the annuity is suitable for the client.
Annuity Scams Typically Target Seniors
Seniors are definitely the target of insurance scams, however, seniors who are close to death are also top targets. One of the main scams is the “stranger-owned” life insurance policies. In this scam, a stranger will pay the elderly person money, buy them life insurance and then when the senior dies, the stranger gets the payout. This is not necessairly illegal, but when they provide the insurance company with false information, it is considered fraud. Most stranger-owned applications will involve some sort of fraudulent information on the application to get it approved.
How To Avoid an Annuity Insurance Scam
- Avoid pressure to sign right on the spot
- Get a referral from a trusted friend
- Research your company ahead of time
- Go with a big-named company
- If it seems to good to be true, it probably is
- If it seems too complex it probably is