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Types of online life insurance frauds and tips to avoid it

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Online life insurance: Fraudsters are always on the lookout for vulnerable people online who they can dupe by luring them with online discounts and offers. In Insurance, frauds are typically committed at the time of applications or during claims.

Types of online life insurance frauds and tips to avoid it
The ongoing pandemic has caused significant changes in all aspects of our lives. It has powered the digital transformation across corporate models, networks, and customer touchpoints making both businesses and consumers increasingly dependent on digital services.
Digital transactions were on the surge amidst the pandemic and ~48 billion digital transactions were recorded in 2020. Stay-at-home orders encouraged Indians to use digital payment options to buy essentials. This greatly benefited the service organizations who were quick to digitize their offerings. Even the Life Insurance sector has witnessed an increase in the number of consumers who are now willing to purchase insurance online since the pandemic.
However, this also attracted fraudulent activities. With more and more users now connected to the internet, there has also been a rise in cybercrime.
Fraudsters are always on the lookout for vulnerable people online who they can dupe by luring them with online discounts and offers. In Insurance, frauds are typically committed at the time of applications or during claims. With more and more people considering online medium to purchase life insurance for themselves and their families, it is important to be beware of fraudulent activities.
Common types of frauds:
Interest free Loan linked to Insurance
While looking for a loan online, fraudsters posing as bank or a representative of an insurance company offer interest free or minimum interest loan. The loan is offered easily on a condition to buy insurance policy and instead of loan EMI you pay the upfront premium which on maturity will repay the loan amount. The loan amount offered is usually 8-10 times the premium of policy you buy.
Once you sign all documents and post the verification call, policy gets issued which you will be told is used to sanction the loan. While you wait receive the loan amount and once the freelook period gets over in this follow up for loan, you have forcefully purchased an insurance policy. The insurance company is nowhere connected to the fraudulent promise of availing you the loan.
Fake websites and hoax emails
Fake websites are most popular in insurance scams. You should be wary of social media advertisements and websites with misspelt links, especially if they ask you to sign up, link your credit or debit cards, offer you schemes like gold coin on purchase of policy, guaranteed no health checks and free health insurance.
The other common frauds include Hoax Emails pointing out issues with your policies and policy lapsed owing to non-payment of premiums, Beneficiary Scams stating that you are a beneficiary of a distant relative or even a stranger and are eligible for a handsome claim, and Bonus on old policy.
Below are a few tips to safeguard yourself while purchasing a life insurance policy online -
Step 1: Verify the Identity of Your Insurance Agents
All agents working on behalf of insurance companies must complete rigorous training and obtain proof of identification, according to the IRDA's stringent standards. If a representative approach you, ask for their identification, write down their details, and then call the insurer's customer service number to verify their identity. This is a preventative measure to ensure you don't become a victim of insurance fraud.
Step 2 – Maintain the secrecy of policy details
Giving away details about your policy documents to a stranger is a tried-and-true way to attract insurance fraud. A con artist may pose as an insurance representative and request details about your policy. They may pose as consumer rights representatives or claim to be contacting from the insurance company's customer service department. Whether they contact you and ask if you have any problems regarding your insurance plans, you should be on high alert.
Step 3 – Report Loss Policy Documents Immediately
Scammers may immediately gain access to your policy documents and file a claim on your behalf. Therefore, you should keep your insurance paperwork in a bank locker/ digi locker and make copies of them if necessary. Notify the insurance fraud investigator right away if you misplace or lose your documents.
Step 4 – Use Public Networks with Caution
Insurance fraud committed electronically is on the rise. Scammers may try to steal your personal information by using public Wi-Fi networks. When transacting on these networks or accessing personal information, be cautious; sign out of any public computers after using them, and make online payments using encrypted connections.
The author, Nitin Mehta, is Chief Customer Officer at Bharti AXA Life Insurance. The views expressed are personal
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