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Buying term insurance for women? Know about common life insurance fraud first!
Incidents of frauds are inevitable and insurance is no strange sector. Life insurance fraud occurs when one or more of the parties involved in a policy act dishonestly in order to profit from it. It can occur in a variety of ways, including by insurance companies, policyholders, and third-party scammers. When you are choosing the term insurance for women, you should know the Common types of life insurance fraud include purposely misstating information on your application to gain lower rates or changing someone else’s policy without their permission as this will help you make an informed decision.
While less severe incidents may result in higher policy premiums, policy denial, or cancellation of coverage, more significant cases of life insurance fraud can be reported to fraud agencies and prosecuted in court. This post will discuss the various types of life insurance fraud in India, as well as what you can do to protect yourself.
Fraud committed by policyholders
Lying on your application: Providing false information on an insurance application, also known as material misrepresentation or concealment, is one of the most common types of life insurance fraud seen when buying term insurance plans. Note that real errors, such as omitting to mention a minor medical surgery you had a few years ago or claiming a lower weight on your application, do not constitute fraud. In most cases, a medical examination can reveal such inaccuracies. In such circumstances, the underwriter will revise your application, and you may be required to pay higher premiums than originally offered. If the insurance company determines that you did not intentionally mislead them, you will still be offered the policy. However, indicating on the application that you are not a smoker despite the fact that you often smoke will be considered a misrepresentation.
False claims: Life insurance fraud can include scenarios such as the insured person faking their death or a beneficiary murdering the policyholder in order to claim death from their term insurance plans. This is highly rare and nearly impossible to pull off, yet people have been known to go to extraordinary measures to satisfy their greed. In addition to murder charges, the law will penalise the guilty party for attempting to profit from the murder.
Frauds committed by a third-party scammer.
Forgery: Most occurrences of life insurance fraud in India occur when other parties, such as a family member, spouse, or scammer, gain access to the policy and change the ownership or listed beneficiaries. When you are buying the term insurance for women note that only the policyholder has the ability to update the specifics of their plan. To change a policy that belongs to someone else, you would have to misrepresent documents or counterfeit your identity. Such forgery frequently results in denied claims and prosecution.
Mobile/email fraud: Scammers posing as insurance agents might use a variety of excuses to defraud policyholders and sell them fake term insurance plans. Selling fake policies, asking people to transfer their existing policy to another for better returns, enticing them with bogus bonuses, and obtaining sensitive financial and personal information from unsuspecting people who click on ads or spam via fake websites and links are all examples.
How to Avoid Cases of Life Insurance Fraud
The prevention of fraud in life insurance begins with the policyholder’s due diligence. Ensure that you only buy term insurance for women from certified insurance agents. Complete the insurance application correctly and honestly. Do not expect that little mistakes when submitting term insurance plans will go unnoticed.
Read the fine print on your policy documentation and do not sign anything you don’t understand. Never give money directly to an agent; instead, make all transfers to the insurance firm itself. When making payments, use a cheque or a credit card because they are easier to track and verify.
Never reply to fraudulent calls about unclaimed bonuses, loan offers, or insurance policy transfers.
Do not click on any suspicious links delivered by email, SMS, or instant messaging apps from unconfirmed sources.
Do not cave in to promises of bonuses and extra benefits. Promises that appear too good to be true are typically exactly that.
Do not discuss sensitive information with anyone, such as bank account information, Aadhaar card information, or insurance policy details.
What Happens When An Insurance Fraud is found?
When an insurance is discovered, the policyholder or the one who has committed the fraud might have to face the following consequences:
1: Denial of the life insurance policy: If the fraud is discovered, the insurance company may cancel the policy completely. This means that the policyholder or nominee will be unable to collect any policy benefits, even if the life assured dies.
2. Cancellation of the life insurance policy: Even if the policy is not denied outright, the insurance company may cancel it if they discover that it was obtained fraudulently. This implies that the policyholder will lose all coverage under the policy.
3. Criminal charges: In some circumstances, life insurance fraud can be considered a criminal act. If the culprit is apprehended and convicted, they may face fines, jail term, or both.
4. Civil lawsuits: If the insurance company experienced financial losses as a result of the deception, they may sue the perpetrator for damages.
At last,
If you suspect fraud, call the insurance company that oversees your coverage and provide as much data as possible. Under the Indian Penal Code, insurance fraud is classified as a fraudulent act, cheating, or forgery. Review your insurance policy on a regular basis to confirm that your ownership and beneficiary information are correct on your term insurance plans, and develop strategies to manage the plan responsibly as you age.
