Life Insurance Advice

A Life Insurance Advice on Fraud

There are numerous types of life insurance fraud carried out by unscrupulous agents and brokers. Among them are four types that you should be aware of as these scams are currently prevalent in UK’s insurance sector. These are termed “twisting”, “churning” and “sliding”. All are destructive and extremely corrupt, so make sure to read on and absorb the contents of this life insurance advice.

Twisting

When an agent tricks a client into terminating his existing policy in exchange of a new one, he is practicing the fraudulent practice of twisting. What happens is the agent or broker basically advises the client to cancel the current insurance policy and purchase a “better” one. Because the agent appears to be a sound financial advisor to the eyes of the client, the client would normally be convinced. Then the unsuspecting client would take the advice of the agent and apply for a new policy. Meanwhile, the agent would earn a large commission on the sale of the new insurance policy. The client is left worse off, as he has to pay an upfront cost, while the agent is laughing his way to the bank.

Churning

Churning is when an agent or broker tries to sell an extra insurance policy to a client who already has an insurance policy with a cash value. The agent does this by giving sound life insurance advice, then promising the client a new policy at a very low cost. The fraud rests in the new policy’s extremely low cost because a huge portion of the premium is being paid by the cash value of the first policy. As a result, the new policy eats up the cash value of the old policy. The agent, meanwhile, is able to earn a commission from his sale.

Sliding

Money hungry agents who sell you a “packaged” coverage, usually containing extra coverage you don’t need such as guaranteed renewable term life insurance, accidental death and disability, or motor club membership, are looking to “slide” in additional benefits, hoping to earn larger commissions. Agents who practice this tell their clients that these products are only sold as a package and cannot be sold separately, when in truth they can.

What to do to avoid insurance fraud

To insure yourself against the aforementioned fraudulent practices, be doubtful when your agent gives life insurance advice and asking you to purchase a new policy. In reality, almost all insurance products are identical, and once you’ve purchased a policy, you wouldn’t need a new one. Unless you wish to increase the amount of cover, purchasing a new policy is never advisable. One is more than enough already.

Also, make sure all your premium payments are received by the company. Whenever possible, pay your premiums by check made payable to the company directly, not the agent or broker. And always ask for an official receipt. GP