What is Insurance Frauds?, Common Insurance Frauds, Phone Frauds, beneficiary payout frauds, Protecting customers from frauds? How can you protect yourself from insurance fraud?, How can this fraud be avoided? Know all the information in easy steps.
We turn to insurance for our financial security and it is very important in today’s times. According to the Economic Survey 2021-22, the reach of insurance in India is 4.2%, out of which life insurance has reached 3.2% of the people. However, it has been increasing continuously for the last few years. Due to the increasing uncertainty in the last two years in view of the pandemic like Corona, more people have started accepting it.
We all buy life insurance keeping in mind our additional financial security. Nowadays with the priority of technology, the number of frauds related to insurance has increased. With data readily available online these days, it becomes easy for scammers to contact and defraud customers. However, the insurance industry is making necessary efforts on its part to reduce all types of frauds. But fraud cannot be prevented by the efforts of the insurer alone. Let us know what is insurance fraud? And how can you avoid it –
What Is Insurance Fraud?
Insurance Frauds is any act committed to defraud the insurance process. It occurs when someone knowingly lies to obtain profit or benefit to which they are not entitled. Although insurance frauds have existed since the beginning of insurance as a commercial enterprise. This is an important problem, which along with the government and other organizations, we all should participate equally and try to stop such activity. In this type of crime, the intention of the accused is to cheat.
This is a crime of “specific” intent, meaning that a prosecutor must prove that the person involved knowingly committed an act of fraud. In today’s technological era, crimes are also becoming high tech. After reading this post today, you will know how insurance frauds can happen and how you can protect yourself from this fraud. Let’s start knowing –
Insurance Fraud Methods
In today’s time all your work can be done digitally. In this way you can get all the information online. By taking advantage of this information, fraudsters prepare schemes to cheat. With digital adoption and easy availability of data, the methods adopted for committing insurance frauds have also evolved a lot.
In today’s time, you too must have come across this type of call or email on your phone or email, which comes to get your personal information. Often due to greed, some people share their personal information and become a victim of fraud. Let us get to know more about some such common insurance frauds –
This type of fraud is one of the most common ways in which customers are misled in today’s time. The fraudster posing himself as a manager of a company or an employee of a bank, gives you some greed, or talks about updating your information. In such a situation, some people also share their personal information. Once you share your information, fraudsters easily deceive you by making fake policies.
In today’s time, due to the availability of data online, many people get to know about your premium. Notify you via email that your insurance cover has been terminated due to non-payment. encourage you to pay the premium by sending an email, and compel you to make the payment by sending a link. When you make a payment by clicking on such a fake link, the payment goes to the fraudster’s account and not to the insurance company.
Through Fake Website/App
These days some people take insurance frauds a step further and set up whole fake websites or applications to lure the customers. Usually these people promise to issue the policy to you with less paperwork and without KYC and health check up to get the policy to you. We encourage you to sign up with your debit or credit card as they collect your personal and financial details.
Apart from this, nowadays fraudsters also cheat people through OTP fraud. Let us see how you can avoid this type of fraud.
Also Read – What is Life Insurance, and How does it work?
Ways To Avoid Insurance Fraud
- Insurance Regulatory and Development Authority of India (IRDAI) has always acted in the best interest of the customers to avoid any kind of fraud. Over time, IRDA has taken several measures to create awareness among the people. In today’s technological era, IRDA is issuing public notices alerting the customers about the possible ways of fraud.
- Along with IRDA, insurance providers in the country have also stepped in and tried to educate their policyholders about scams and frauds. Today, awareness sessions are organized by insurance companies from time to time, where information about wrong policy sales and fraudulent activities are disseminated along with insurance information. Today technology is being improved so that fraud can be eliminated.
- In today’s time, apart from all these methods, there is a need to take necessary steps to protect oneself. Avoid sharing your personal details like date of birth, address, bank details etc. with anyone over phone calls. Also do not click on any payment link.
- Do not share your personal information over SMS or email from unknown sources. One should also stay away from fake websites and insurance policy offers that look like the truth.
- Whenever you share your personal information and financial details on an insurer’s website, verify the security protocols of that website.
- You also need to remember that no down payment or processing fee is required to settle any claim or beneficiary payment. If anyone tells you to pay, then definitely ignore them.
- Before paying for any type of policy, check its documents thoroughly and if you are buying a policy from an agent or intermediary, then also check its ID proofs.
Also Read – Why life insurance is important to have?
Frequently Asked Questions(FAQ’s)
Q1. What are insurance frauds?
Insurance fraud is any act committed to defraud the insurance process. In this type of crime, the intention of the accused is to cheat.
Q2. Is it a crime to lie to an insurance company?
Whenever you lie to the insurance company while taking insurance, then you may have to face criminal penalties later. This may sound like a good idea to you initially, but in reality, it is a form of insurance fraud. For lying, you can be jailed, fined or both.
Q3. What are the types of insurance fraud by the insured?
Talking about the types of Insurance Frauds, claim fraud is the biggest problem in front of the insurance company in today’s time, besides eligibility fraud and application fraud are included.
The Bottom Line
Life insurance is very important for financial security in life and equally important you have to avoid its fraud. Whenever you consider any insurance, the first thing to do is to contact an insurer who is trustworthy. Be wary of such messages and calls that give you false information about insurance or lure you into something. Contact the insurance provider directly and avoid fraud from happening. For more information about life insurance, definitely read our other articles