Fraud Threats In The Insurance Industry; How Can You Detect Them To Protect Yourself?

Often insurance fraud is related to the claim amount in a term policy and the maturity amount in a traditional policy. People buy an insurance policy intending to save money and to support their family members on their unfortunate untimely death. Fraudsters consistently look for people who can be cheated easily by giving access to their insurance details. Many people lose their insurance claim or the maturity amount every year by getting into the fraudster’s trap. Before exploring the ways to avoid insurance fraud, let’s find out various fraud threats that are there in the insurance industry.

Identity Theft For False Claim

There are cases in which criminals got access to the key identity documents of the people through which they bought insurance policies, manipulated the address and contact details, and later claimed money by becoming a beneficiary on the death of the insured.

Also Read: Don’t Click Any Suspicious Link! Tips To Protect Yourself From Phishing Scams

Withdrawal Of Insurance Maturity Amount By The Fraudsters

It takes a very long period to build a corpus by investing in a traditional insurance policy. Criminals having information about your insurance investment may try to get access to your crucial personal and financial details such as bank account details, ID proofs, etc. They get the bank account details in the policy changed by faking signs. On maturity of the policy, the account is credited to the fake account.

Sell Of Fake Insurance Policy

Criminals can sell the policy by impersonating an insurance agent. Especially, people who pay premiums through cash are at higher risk of getting into this fraud.

Forced Selling Of Insurance Policy

There are many types of insurance policies available in the market and their premium may vary significantly from each other. Some agents do the forced selling of insurance products without knowing your actual insurance needs. It may bind you into a long-term commitment to payment of insurance premiums whereas the agent enjoys a hefty commission on such products.

Also Read: RBI Allows New India Co-operative Bank Depositors To Withdraw Up To Rs 25,000

How To Detect And Avoid Insurance Fraud?

If you get a phone call or an email asking about your insurance details or cautioning that you may lose the invested amount if you don’t do what they tell you to do, then be sure, it’s a fraudster trying to get you into a trap. If the insurance agent doesn’t try to understand your needs and force you to buy what they want, it can be a fraud.

Keeping your personal and financial data safe is the first step to avoiding insurance fraud. You must not share the insurance details such as the policy number, coverage amount, maturity date, etc. with anybody. Keep the policy documents safely with you. Complete the KYC in your insurance policy and verify the same from time to time. Never pay insurance premiums in cash. Try to use the online mode to pay your insurance premiums. A little caution can help you easily avoid insurance-related fraud.

Author is an independent financial journalist

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)