As if buying life insurance wasn’t complicated enough, there are
multitudes of life insurance scams out there, run by criminals just
looking for opportunities to separate people from their money. Not only
do their victims lose out financially, but often learn that they can’t
get legitimate life insurance or their identity has been stolen. So how
can you preserve yourself from life insurance scams?
Know why you are buying life insurance
If you already have life insurance and someone is offering you a
better deal, think carefully about why you would make a switch. Do you
have reason to be dissatisfied with your current policy or insurance
company?
If someone is offering you a fabulous deal that will make you big
bucks, think long and hard and don’t let visions of what you could do
with all that money cloud your judgment. An outrageously good deal is
probably just one more life insurance scam.
Whether you have life insurance or not, be clear with yourself
what your intent for having life insurance is. If you have a young
family, then you want them to be protected if you die suddenly and can’t
support them. If you are older, you might be looking for enough to
cover funeral expenses and care for your spouse. Whatever your goal,
know how much insurance you really need.
Ask questions, think about it, and ask some more
One reason life insurance scams are so common is that buying
insurance can be complicated and many people don’t fully understand what
the terms of their policies are. For example, some life insurance
policies will only pay out after you have paid into it for 15 or more
years. This kind of policy would not be a good option for an elderly
person. Understand what it is that is being offered to you, and any
penalties you would face if you gave up your existing coverage.
One popular scam involved getting an elderly person to pay for a
life insurance policy and the agent who sells it is listed as the
beneficiary. These policies are usually for a very large payout, like
$5 million. The seller offers to loan the person the money to buy the
policy. Paying back the loan can be expensive, so many people end up
transferring the policy to the person who lent them the money. The
person who was insured then finds out they can’t get other life
insurances, and the person who sold them the policy gets the payout in
the end. You have to ask yourself why some stranger would want to
benefit from your death, and realize that it’s not to help you out.
Check out the company
When you buy life insurance, you are planning on doing business
with the company that sells it to you for a long time. So you want to
know that they are an honest and stable company. Check with the Better
Business Bureau, look online and find out as much as you can.
Scammers might try to tell you all about the evil big insurance
companies and how they are out to get you and don’t give you a fair
deal. The more established insurance company’s deals will of course
look not as enticing as what the scammer offers. But whatever benefits
the companies offer you, it is likely that you will actually receive
them. This is not the case with the scammers.
In short, don’t fall for promises of huge payouts for small
investments, and do the research you need to do to protect yourself from life insurance scam.
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