A Closer Look At Life Insurance And How To Avoid Being Scammed

Life insurance is a form of insurance that pays out a tax-free lump sum to your dependents in the untimely event of your death. Effectively, a life insurance policy is a contract between you and the insurance provider wherein the insurance company agrees to pay an agreed upon sum of money to your named beneficiary as long as the premiums are current. People take out life insurance policies for a number of reasons. You may want Life Insurance to provide some financial security and peace of mind for the family or to cover the payment of an Interest Only Mortgage.

Life insurance can be purchased by individuals, but is also offered as a perk by many employers. Often times, large employers and government employers offer group life insurance at no cost to the employee.

The cost of life insurance varies depending on such factors as your age, health, and occupation. For example, the premium for a 25-year-old, male, non-smoker in excellent health will be far less expensive than a similar policy for a 65-year-old male smoker. Similarly, a sky dive instructor would have to pay much higher premiums for life insurance than would a librarian.

Broadly there are 3 ways a life insurance agent could be scamming you. We have enlisted them below for your benefit:

Offering Coverage that you don’t need!
This is classic mis-selling. Insurance companies bank on the fact that most people in most cases do not read or understand their life insurance needs. With standard products, what many insurance providers tend to do is try to sell you coverage that you might not need, but, which on the other hand, tend to be extremely lucrative for them. Furthermore, the insurance agent speeds up the process in the hope that you will ignore the fine print and sign up for a package that is not well-suited to your specific needs.

Persuading you to pay ‘Cash’
We strongly recommend that you do not pay your insurance premium in cash to an agent. However if you do pay cash, do ensure that you get a proper receipt for the payment. There are unscrupulous companies out there posing as genuine insurance agencies that will not think twice about robbing vulnerable individuals. These slick oil conmen get you to sign up to a worthless piece of paper full of garbage you are left without an insurance coverage. The worst part is that most victims only come to know of this scam when they have met with some mishap and find out that there is not enough insurance to cover them.

Luring you with benefits!
This is one of the oldest tricks in the book. Insurance agencies and agents have a way of promising much and delivering very little. Look out for life insurance agents that offer you plans, with a guarantee that the policy would run premium-free for a specific period. Some agents play it smart and offer you great discounts for signing you up for a new policy, while replacing it with an old policy. The trick is that the old coverage gets terminated and new coverage does not get initiated due to the cumbersome procedural bottlenecks. Thus, exposing you to risk without cover.

By: jide

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Jide Pearce is a freelance writer for InsuranceSolutionsrus.com