Cheating Life Insurance: Strategies For Success

Life insurance fraud is a significant issue that impacts everyone by driving up premiums and creating financial risks. It can take many forms, from providing false information on a life insurance application to manipulating another person's policy or even faking a death to claim benefits. This type of fraud can be committed by policyholders, beneficiaries, agents, or even the insured themselves, and it can result in canceled coverage, denied claims, or criminal charges. To protect yourself from fraud and ensure your loved ones receive the intended benefits, it is essential to be aware of the different types of life insurance fraud and how to prevent them.

Fake your death

Faking your death to claim life insurance money is a difficult form of fraud to pull off, and it is not very common. However, it does happen, and if you are caught, there will be serious consequences.

• Plan your disappearance: Choose a location where you want your "death" to occur and plan your exit strategy. This could involve travelling to a foreign country where it is easier to bribe local officials and obtain false documents.
• Stage your death: Create a scenario that explains your death. This could be a fake accident, a staged crime, or an apparent suicide. Make sure there is enough evidence to convince the authorities that your death was real.
• Assume a new identity: Obtain fake documents, such as a new birth certificate and passport, to create a new identity for yourself. This will help you start a new life and avoid detection.
• Choose your accomplices carefully: You will likely need help from others to stage your death and create a convincing story. Make sure your accomplices are trustworthy and have a strong incentive to keep your secret.
• Cover your tracks: Remove or destroy any evidence that could link you to your previous life. This includes digital footprints, such as social media accounts and online activities.
• Maintain a low profile: Avoid any behaviour that could draw attention to yourself or your new identity. This includes staying out of the public eye, refraining from contacting friends or family, and not accessing your previous financial accounts.

Remember that faking your death is a serious crime and, if caught, you could face criminal charges, imprisonment, and significant financial penalties. The consequences of being discovered are likely to be life-altering and may affect your ability to live a normal life.

Pocket premiums

Pocketing premiums is one of the most common types of life insurance fraud, according to the FBI. In this scam, life insurance agents collect premium payments from customers and embezzle them, keeping the money for themselves instead of passing it along to the insurance company.

Here's how the scam works:

• Initial Contact: The scam usually starts when a life insurance agent approaches a customer and offers them a policy. The agent may be a representative of a well-known insurance company, which adds credibility to their pitch. They may use high-pressure sales tactics, creating a sense of urgency to push the customer into making a quick decision.
• Premium Collection: The agent collects the premium payments from the customer. They may ask the customer to make the payment directly to them, using their name, a P.O. box, or payment methods like wire transfers, gift cards, prepaid cards, or money orders. This should raise a red flag, as legitimate insurance companies typically require payments to be made directly to the company.
• Embezzlement: Instead of forwarding the premium payments to the insurance company, the agent pockets the money for themselves. They may create a policy and then cancel or let it lapse without the customer's knowledge, or they may never create the policy at all.
• Claim Denial: The customer believes they have a valid insurance policy and continues to make premium payments. However, when the time comes to file a claim, they discover that their policy does not exist, as the agent has embezzled their money.

To avoid falling victim to this scam, it is crucial to always make premium payments directly to the insurance company. Be wary of agents who insist on collecting payments themselves or ask for payment methods other than those accepted by the company. Additionally, monitor the status of your policy regularly to ensure it is active and has not been cancelled or lapsed without your consent. Finally, work only with licensed insurance agents and confirm their credentials with your state's insurance department.

Use bait and switch

Life insurance providers will often use a "bait and switch" tactic to lure customers in by quoting them the lowest life insurance premium price to get them to commit to the application process. However, once the customer has undergone the uncomfortable process of giving blood, the price is then increased. This is justified by the results of the blood test, which the customer is led to believe they need to comply with to get the insurance.

For example, a customer may be quoted a price for a 25-year/$2M policy, but after the blood test, the price increases by 25%. The customer is then told that they can do another full body check-up in two years and if their health has improved, the original quoted price will be honoured. However, to take advantage of this, the customer must sign up for the policy at the higher price.

This is a deceptive tactic used by insurance companies to take advantage of customers who are often already in a vulnerable position. It is important to be aware of this tactic and to shop around for quotes from multiple providers to avoid being scammed.

Forge documents

Forgery is a common type of life insurance fraud. It occurs when someone other than the policyholder changes the ownership or beneficiaries of a policy. This can include forging documents or faking their identity. Only the policyholder can legally make changes to a policy, and forgery-based fraud may result in a delayed claim and legal prosecution.

Forgery is often committed by family members or acquaintances. To avoid falling victim to this type of fraud, it is important to keep your policy secure and regularly check your policy status. You should also be cautious of agents who try to convince you to make unnecessary changes to your policy, as they may be attempting to earn extra commissions.

Forgery can also occur when scammers pose as legitimate agents and sell fake life insurance policies, providing convincing documents and bills. To avoid this scam, always verify that any agent you work with is licensed and check their credentials through your state's insurance department. Also, check that the insurance company is real and properly licensed.

Another form of forgery is when an agent submits a life insurance application without the insured's knowledge or permission. This can happen when people apply for life insurance in a state where the product is not available, or when they misrepresent their location to access a different product. To prevent this type of fraud, it is important to have agent interaction during the application process and to verify the agent's credentials.

Create fake policies

Creating fake policies is one of the most common types of life insurance fraud. Scammers may pose as insurance agents and sell fake policies to victims, who believe they are getting legitimate coverage. Here are some ways this scam can play out, along with tips on how to avoid falling victim to these schemes:

Fake Agent Selling Fake Policies

Scammers may pretend to be insurance agents from well-known insurance companies and offer fake policies to unsuspecting customers. They may request cash or direct payments, which is a red flag since premiums should always be paid to a legitimate insurance company. The scam is usually only discovered when the policyholder dies and their beneficiaries try to claim the payout, only to find out that the policy was fake. To avoid this scam, always verify that any agent you work with is licensed and check their credentials through your state's insurance department. Also, make sure that the insurance company they claim to represent is real and properly licensed.

Ghost Brokers

Ghost brokers are fraudsters who pose as insurance agents and sell fake insurance policies, often advertising cheap insurance on social media or other sites. They will request cash or direct payments, and victims believe they have purchased a legitimate policy. However, the scam is only discovered when their beneficiaries try to file a claim after the policyholder's death.

Fake Websites

Scammers may also create fake websites that pose as legitimate insurance companies. These websites often promise that you can sign up for coverage online and may offer rates that are much lower than those of their competitors. They may also make it incredibly easy to sign up, claiming that no health underwriting is required. When you submit your credit card or bank information to sign up, the thieves steal your money. To avoid this scam, always verify the legitimacy of a website and the insurance company it claims to represent before providing any personal or financial information.

Dishonest Online Quotes

Some scam websites offer instant online quotes in exchange for your contact information. However, they are just looking to collect your information so they can sell it to multiple insurance agents who will then contact you to prepare a quote. You end up on a sales list, which was not your intention when you signed up. Be cautious when providing your contact information to unknown websites, and always verify the legitimacy of the website and the company it claims to represent.

In summary, creating fake policies is a common tactic used by life insurance scammers. They may pose as agents, create fake websites, or offer dishonest online quotes to lure unsuspecting victims. To avoid falling victim to these scams, always verify the legitimacy of any agent, website, or company you are dealing with and never provide sensitive information or payments without doing your due diligence.

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