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How to Protect Yourself from Insurance Fraud

by Jagger Esch

When discussing the financial world, insurance is probably one of the safer aspects according to statistics. This doesn’t mean immunity from insurance fraud.

For seniors, this is a cause of concern as many don’t use a computer regularly.

The biggest issues regarding insurance fraud among consumers are stolen social security numbers, fake insurance policy placement, and scams looking to steal any personal information possible.

The good news is you don’t have to be caught off guard. Be proactive and protect yourself against insurance fraud. Also, don’t be afraid to report fraud.

Tips to Protect yourself From Insurance Fraud and Scams

Applying for or changing insurance policies and sorting out life insurance options will have you contacting many different agents.

We’ve put together some tips to help keep your personal information more secure during this process.

Research Agent Licenses

When working with any new insurance agent you should investigate their insurance agent license information, before you give any personal information out.

Make sure your agent is legitimate; remember all non-fraudulent agents and brokers in the US are licensed.

To inquire about an insurance agents’ license information, go to your state insurance regulator’s website.

While doing your research, if you uncover their license doesn’t exist or has been suspended – stop working with them and look for another agent.

Lock your Credit, Protect your Social Security

For the longest time, most insurance companies required social security numbers on all insurance applications. Luckily for us, times have changed.

While new regulations for some property and casualty insurers don’t require social security numbers on applications anymore. Most property and life insurers however, will still require SS numbers.

Meaning, if you’re simply looking for a quote, don’t give them your social security number; it’s not required. Any credible insurance agent won’t be shocked if you request to wait until the end to give them your SS number.

Not many agents will tell you this, but the only true effective way to completely protect your social security number, is to totally freeze your credit.

Due to recent new federal legislation regarding SS numbers, everyone in the United States can freeze their credit file, for free.

Once you have gone through the difficult process of freezing your credit, you can stop worrying about fraud; get some peace of mind.

The problem is, after you freeze your credit, unfreezing it to re-gain access – is just as difficult.

Be wary of writing out checks directly to Insurance Agents

When making payments, you should be adamant about writing out payments to the name of the insurance company itself, rather than the agent. Sometimes, there’s one-off situations that require you to break this rule.

Although it’s rare, specific types of insurance will have you write out checks to an agency.

If your agent asks you to make a check out into their name, a red flag should go up.

To be safe, call the insurance company directly and ask if you can pay them directly. Sometimes the only option is to write a check directly to the agent. In this case, you should inquire about a fidelity bond.

Premium Embezzlement

To branch off when discussing insurance agents and fraud issues, premium embezzlement is a thing and yes, it does happen.

Some individuals who work for a licensed and credible insurance firm are simply up to no good. Reports have been made that they’ve scammed consumers for their personal gains.

One way of scamming might be, a fraudulent agent will collect your premium payment and instead of giving it to the insurance company – they just pocket your money.

Meanwhile, as a consumer, you believe your premium has been handled accordingly and count on using your coverage when needed. Unbeknownst to you, your premium was never actually paid.

On the contrary, your insurance company assumes you’re not keeping up your end of the deal; resulting in cancellation or may not renew your policy.

You should be receiving a copy of your policy, an insurance ID card and/or receipts of payments made. If you haven’t gotten proof, or you stop getting proof of payments made, this is a sign that your premiums haven’t been submitted.

Contact your insurer immediately and get to the bottom of this as quickly as possible to prevent a loss in your coverage.

Medicare Insurance Fraud

Medicare’s Affordable Care Act doesn’t require beneficiaries to get a new ID card. If you’re contacted by someone impersonating a government or Medicare professional and are asked to pay for a new insurance card, it’s a scam.

If this happens, don’t share any personal information with them; hang the phone up immediately, and contact your non-emergency local police department to report the call and phone number.

Check financial strength ratings

Ratings and reviews can still be protection by making you aware of any shady behavior other consumers may have experienced.

A variety of governmental state agencies regulate all insurance nationwide. Meanwhile, their financial portion is rated by 4 private rating agencies.

However, these agencies are NOT associated with the government.

Each rating agency has its own rating system; insurance specialist AM Best is the easiest to comprehend. AM Best rates insurers with metric on their Financial Strength Rating.

Consumers want to look for A- and above.

It’s important when buying any sort of cash value life insurance and when considering annuities, to check all prospect ratings.

Don’t Trust Phone Calls and Check Website Credibility

Just because you saw it on a website, or you get a phone call with information – doesn’t mean it’s factual.

A good rule of thumb is, if it’s important enough you’ll receive an official notification in the mail. No insurance underwriter is going to call you and ask for your social security number or your bank account information.

The bottom line is that you don’t just give up that information over the phone when asked.

Even if you get a letter from your insurance company requesting personal information in the mail, call your agent or insurance company and confirm the request is authentic.

Should you get a phone call inquiring your personal info, promptly hang up and call the number on the back of your insurance card.

Be Cautious of “Phishing” Scams

These same rules apply for websites and emails. Sharing information online should be done with caution.

An insurance company doesn’t typically email you asking for additional information, unless you’re signed up for online billing.

The danger with phishing emails

Some emails appear to be from a legitimate source; these emails are phishing scams.

E-mail scams try to get you to volunteer your personal or account information, like your passwords, credit card and bank numbers, and social security numbers.

Be careful what links you click on and don’t send your personal information to anyone until you’ve verified the source. If you’re unsure, then explore.

Steering Clear from Fraud

There’s not a single guide on the market that can completely keep us protected from any type of fraud or scams.

These tips should help you feel safer and provide you some tools when combating shady situations.

Not everything is what is seems. Insurance scams and fraudulent activity has gotten more convincing with the advances in technology.

It has become harder to detect, stay alert and protect your personal information; after all, it does belong to you. With these tips you can protect yourself from insurance fraud in the future.


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