5 Types of Online Life Insurance Frauds and How You Can Avoid Them

In today's fast-paced world, technology has revolutionised the way we buy and sell products, including life insurance. Unfortunately, with the increasing use of the internet, scammers and fraudsters have found new ways to exploit individuals who purchase life insurance online.

Insurance fraud is a devious and illegal activity that preys on the vulnerabilities of the insurance industry. It is a type of financial crime where an individual or an entity deliberately provides false information so as to gain financial benefits or services. These fraudulent activities can cause significant harm to individuals, resulting in loss of money and even identity theft. It affects not only the insurer and the insured but also honest policyholders like you.

In this article, we will discuss the different types of online life insurance fraud. We will also provide a few tips on how to avoid falling victim to them so you can secure your and your family's future with confidence.

There are numerous ways in which insurance fraud can occur, and it is not just limited to policyholders or claimants. Some of the common online insurance frauds include -

1. Phishing Scams

Phishing scams are one of the sneakiest forms of online life insurance fraud. The scammers use fraudulent emails or messages that look like genuine ones to get access to your personal information. This includes sensitive information like your credit card numbers, bank info, etc. - which can then be used to commit identity theft, deceitful account openings, unapproved purchases, etc.

What Can You Do?
To avoid such phishing life insurance scams, you should be cautious of unsolicited emails or messages that ask for personal information. Remember, legitimate insurance companies will never ask for sensitive information via email or a website that is not secure.

2. Fake Websites

The internet has made life insurance more accessible than ever before. However, this convenience comes with a new threat - fake websites. It is a commonly encountered life insurance fraud where scammers create websites that look identical to legitimate insurance providers, including logos and other such key identifying features. Their goal is to lure unsuspecting customers into providing their personal and financial information.

What Can You Do?

• Always double-check that you are on the official website of the insurance company before entering any personal or financial details.
• Look out for security features such as the "https" protocol and a padlock symbol in the website address.
• Make sure you purchase life insurance from an insurance provider licensed by the IRDAI.

3. Unsolicited Sales Calls

Ensure that you don't fall for unsolicited sales calls that try to sell you life insurance policies. Although such calls may sometimes be genuine, scammers may also pose as insurance company representatives or agents to sell fake policies or obtain sensitive personal information.

What Can You Do?

• To avoid falling victim to such scams, it is recommended that you remain vigilant when receiving calls from unfamiliar numbers.
• You should also refrain from sharing any personal information unless you have made the call yourself.

4. Fake Agents

You should also watch out for fake agents as they are another common type of life insurance policy fraud. These imposters claim to work for genuine insurance companies and may approach customers via social media or even directly. They pretend to offer low-cost policies with blown-up cover amounts to lure unsuspecting customers.

What Can You Do?

• Always verify an agent's credentials before buying any policy, providing personal information, or making a payment. Make sure you buy life insurance from licensed agents only.
• Thoroughly research the insurance company and policy before moving forward.
• Check reviews and ratings from trusted sources, and be cautious of any policy that offers exceptional benefits or premiums that are unusually low.

5. Beneficiary Payment Fraud

This type of life insurance fraud is where scammers contact people and falsely assert that they are beneficiaries of the life insurance policy of an extended family member, a stranger, or so on. They will typically demand an upfront payment of a processing/advance fee to release the intended claim amount. Despite making the payment, you may not receive any payment from the fraudsters, who vanish without fulfilling their promise.

What Can You Do?

• You should be well aware of such tactics used by fraudsters.
• Avoid paying any fees or providing personal information in response to unsolicited calls or emails.

Legitimate insurance companies never ask for processing fees for a valid claim. They typically do not contact beneficiaries without prior notice.

Online life insurance fraud is a serious issue that requires caution and diligence. Fraudsters use various tactics to mislead naive victims like fake websites, phishing scams, fake agents, unsolicited sales calls, beneficiary payment fraud, etc. However, if you stay well-informed and vigilant, you can protect yourself from falling prey to these fraudulent schemes.