Insurance frauds happen when a company, agent or customer deceives to gain profit and money illegally. This can happen in the process of buying, selling or guaranteeing insurance.
It can range from individuals either defrauding a company or another individual. But no matter what the type it is, fraud is damaging to both consumers and businesses.
Though the most common in terms of costly insurance fraud is auto mobile fraud but Life Insurance Fraud is one of the most dangerous at of them all. Life Insurance Frauds are used to get money from an Insurance company through a real of faked death.There are many other ways for people to collect life insurance money through fraud, the following are some ways it should be looked out for.
Types of Insurance Fraud Cases:
Medical misrepresentation of facts is a ‘soft’ form of insurance fraud. In this case, the individual cons the company by giving them selected information while filling out a form. The hope is to have the policy issued at a low rate and later pocket the profit when the health condition turns out to be more serious. Hiding medical history does not come without flaws.
All the insurance company has to do is get in touch with the Medical Information Bureau and they will get the correct information. How they act upon it is later up to them.
Some people fake their deaths to get the money. Usually it is done to give the money to the family. A person has an accident or an incident where the person dies. Once the money is securely in the family, the ‘dead’ person comes back either claiming to be kidnapped or a case of amnesia.
Another form is where a false identity is created for the sole purpose of getting killed off. False name, pictures, information is created and an insurance policy taken under their name. Once the person committing the fraud thinks it fit, the false person is killed off.
Viatical fraud is when people get patients suffering from terminal illnesses to buy lots of insurance policies. Most of the time they get policies that have annuity; certain sum of money paid steadily over a period of time. When the patient is given this policy, they have money until their death and the rest is pocketed by the defrauding party who never notify the company of the death.
Some companies also target their own customers for life insurance frauds.
They not only cheat the company, they cheat the people who use this facility. Some of the ways they do this are simple and easily noted. For example, if an agent from the insurance company were to change someone’s insurance status without telling them this would be a sign. Another example is how they forge the signature of a person and use it as they please, or promise benefits that the person never gets.
Since it has become easier to get conned, it is best to keep an eye on prospective suspects and monitor their moves.