Whole Life Cover

Fraudulent Practices Your Agent Can Do to Your Whole Life Cover

Insurance fraud is not uncommon in the insurance industry. In fact, a lot of cases have been reported in the UK about insurance agents committing fraudulent practices on their clients� whole life cover policies. Among them are four of the most common fraud types carried out by unscrupulous agents. It is important to be aware of these as consumers don�t normally see these acts until the damage has been done. Knowing beforehand you�re being scammed is the key to unlocking these dirty schemes. Otherwise you�d pay a lot for your ignorance. Here are the top four fraudulent acts agents do to life cover policies.

Twisting

Twisting occurs when an agent tricks a client with an existing life insurance into terminating his old policy and take out a new one. Usually the agent would inform the client that a new and better life policy has been launched by the company, when in reality it�s the same policy but with added optional benefits. Insurance agents successfully deceive the client by not disclosing some optional benefits even before the client takes out his first whole life cover policy. So when the agent presents a �new� product and parades the benefits he originally hid, the client would get the impression that the product is indeed new. Thus, he takes out this so called new policy. Consequently, the agent would earn another commission on the sale.

Sliding

If you�ve been introduced to a �packaged� whole life insurance policy, where different riders and benefits are attached to the policy, you were probably being scammed. Industry players refer to this method as �sliding� because agents attempt to slide in some extra riders and benefits so you�re premiums would increase, thereby increasing his commission as well. The riders and benefits being slid in are usually coverage you don�t need such as motor club membership and gift certificates. This may appear to be bogus but a lot of people have fallen victims of this type of insurance fraud.

Churning

Churning is a little more complicated than the previous types. Say a client has an existing whole life cover policy, which means his policy has the ability to accumulate cash values and earn dividends. Knowing this, an agent would inform the client that there is a new product that offers the same benefits but with much cheaper premiums. He would then advise the client to take out this new product because it would allow his coverage to double in exchange for an almost insignificant amount of premium. Naturally, the client would become interested and give in. What the client doesn�t know is that the agent would use the outstanding cash value and dividends of the old policy to purchase the premiums of the new policy.

In other words, a huge portion (sometimes all) of the premium is being paid by the cash value and dividends of the old policy. While this is happening, the agent is laughing his way to the bank as he has earned his commission from the sale of the new policy. GP