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As if buying life insurance wasnt 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 cant 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 dont 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 cant 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 dont 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 cant 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 its 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 dont give you a fair deal. The more established insurance companys 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, dont fall for promises of huge payouts for small investments, and do the research you need to do to protect yourself from life insurance scams.
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