Types of Online Life Insurance Frauds and How to Avoid Them

Getting life insurance is one of the most crucial steps that you need to take in order to protect your loved ones in case of an unfortunate incident. The COVID-19 pandemic has shown us unpredictability life beholds and apprised us of the importance to secure our loved ones financially in case of unforeseen circumstances with life insurance. Due to the pandemic, many transactions have shifted online. This has also led to an increase in cases of online insurance fraud, wherein fraudsters pose as insurance agents and dupe people with fake offers and false promises.

A few cautionary steps can help you steer clear of these frauds while purchasing a life insurance plan. However, before we go ahead and discuss these steps, let's talk about a few red flags to watch out for while purchasing life insurance plans.

Types of Life Insurance Frauds

1. Fake Websites

Few of the most common insurance frauds are executed through fake websites. You must look out for social media ads and websites with incorrectly spelt links, especially when they ask you to sign up with your credit cards or debit cards. Most of these websites promise zero health checks, minimal documentation, and easy KYC in order to lure users.

2. Fake Emails

Another common method used by scammers to execute insurance fraud is through fake emails. You might receive an email from a life insurance firm highlighting some problems with your insurance plans. It might also tell you that your policy has lapsed due to unpaid premiums. It's best to ignore such emails as they are often sent out by scammers. If you feel that a particular email might be genuine, it's best to confirm the same with your insurance company.

3. Beneficiary Scams

This is another life insurance scam that lures you by claiming that you're a beneficiary of some distant relative or even a total stranger. You're then required to pay a processing fee in order to receive the claim. It's always a good idea to report such scams as they are meant to misguide innocent people.

How To Avoid Life Insurance Fraud

Now, let's go through each of these steps and understand all the precautions you should take while buying insurance in order to avoid being a victim to insurance fraud.

Step 1 - Verify the Identity of Your Insurance Agents

According to the IRDA's tight regulations to insurance firms, all agents operating on behalf of insurance companies must complete rigorous training and obtain evidence of identification. If a representative approach you, you should first ask for their ID, take down their information, and then contact the insurer's customer support number to authenticate their identification. This is a precautionary step designed to keep you from becoming a victim of insurance fraud.

Step 2 – Avoid Paying in Cash

No insurance representative will ever request cash from you. In addition, to guarantee that you are issuing the check to the correct account, call the customer service centre and confirm the information to be included on the cheque. This will prevent you from inadvertently writing a check to an agent who will deposit the funds under a similar-sounding name and becoming a victim of one of the numerous possible insurance scams. Even if an agent is representing a private firm, the information on the check should be of the insurance company and not of the private firm.

Step 3 – Keep Policy Details Confidential

Giving out information about your policy paperwork to an unknown third party is a proven method to draw insurance fraud. A fraudster may appear as an insurance representative and ask you for information regarding your coverage. They may masquerade as consumer rights representatives or pretend to be calling from the insurance provider's support centre. You should be on high alert if they contact and inquire whether you have any concerns about your insurance plans.

Step 4 – Report Loss Policy Documents Immediately

Scamsters may acquire access to your policy documentation and file a claim on your behalf. This is why, if necessary, you should keep your insurance documents in a bank locker and make duplicates of them. If you misplace or lose your paperwork, inform the insurance fraud investigator immediately. Typically, you would need to file an FIR, issue an advertisement in the media, and present an indemnification bond on stamp paper to the insurance company.

Step 5 – Be Careful While Using Public Networks

Cases of insurance fraud done electronically are on the rise. Scammers might utilize public Wi-Fi networks to steal your personal information. Be cautious when transacting on these networks or accessing personal information; sign out of any public computers after using them and employ encrypted connections when making online payments.

As the need for insurance grows, so does the regrettable risk of falling victim to insurance fraud. Fraudsters are continuously looking for new and creative methods to profit from your investments, which is why you must be vigilant and adhere to these best practices.

Disclaimer:

*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

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