What are the Various Types of Life Insurance Fraud?

Life insurance fraud takes place when any of the parties involved in a policy do something to benefit from it in a dishonest manner. It can occur in different ways by insurance companies, policyholders, or third-party scammers. Common types of life insurance fraud can involve purposefully misstating information on your application to get better prices or altering someone else’s policy without their approval.

While less severe cases might see you being hit with higher policy premiums, policy denial, or cancellation of coverage, more serious cases of life insurance fraud can be reported to fraud agencies and brought to court. This article will highlight the different ways in which fraud related to life insurance in India takes place and what you can do to stay safe.

 

Fraud Perpetrated by Policyholders

• Lying on your application
  
  Also known as material misrepresentation or concealment, providing incorrect information on an insurance application is one of the most common forms of life insurance fraud.
  Note that genuine mistakes like forgetting to mention a small medical procedure you had a few years ago or reporting a lower weight on your application do not count as fraud. Most times, a medical examination can highlight such errors. In such cases, the underwriter will correct your application, and you may have to pay higher premiums than initially quoted. You’ll still get an offer to purchase the policy if it is determined that you didn’t intentionally mislead the insurance company.
  However, something like mentioning you’re not a smoker on the application even though you regularly smoke will be counted as a misrepresentation.
  
  

• False claims
  
  Life insurance policy fraud can involve scenarios like the insured person faking their death or a beneficiary murdering the policyholder to claim benefits. This is extremely rare and almost impossible to pull off, but people have been known to go to great lengths to fulfill their greed. In addition to murder charges, the law will also punish the guilty party for trying to profit from murder.
  

 

Frauds Perpetrated by a Third Party Scamster

• Forgery
  
  Most cases of life insurance fraud in India take place when other parties, like a family member, spouse, or scammer, get access to the policy and change its ownership or named beneficiaries. Only the policyholder wields the power to change the details of their plan. You would need to misrepresent documents or forge your identity to alter a policy owned by someone else. Such forgery will very often lead to denied claims and prosecution.

 

• Phone/email fraud
  
  Scammers pretending to be insurance agents can come up with all sorts of excuses to dupe policyholders. Examples include selling fake policies, asking people to transfer their existing policy into another one for better returns, tempting them with non-existent bonuses, and acquiring sensitive financial and personal details from unsuspecting persons clicking on ads or spam through fake websites and links.
  

 

How to be Safe from Cases of Life Insurance Fraud

 

• Preventing fraud in life insurance starts with due diligence on the part of the policyholder. Ensure that you purchase only from licensed insurance agents. Fill out the insurance application correctly and honestly. Do not assume that a small mistake will go unnoticed.
  
  

• Read all the fine print in your policy documents and do not sign anything you don’t understand. Never give money directly to an agent — you should make out all money transfers to the insurance company itself. Use a cheque or credit card while making payments, as they are easy to track and verify.
  
  

• Never respond to fake calls related to unclaimed bonuses, loan offers, or transfers regarding your insurance policy.
  
  

• Do not click on dubious links sent through email, text, or instant messaging apps from unverified sources.
  
  

• Do not cave in to promises regarding bonuses and extra benefits. Promises that seem too good to be true are usually just that. 
  
  

• Do not share sensitive information like bank details, Aadhaar card details, and insurance policy details with anyone.

If you encounter fraud, contact the insurance company that manages your policy with as many details as possible. Under the Indian Penal Code, insurance fraud can be dealt with as a fraudulent act, cheating, or forgery. Review your insurance policy periodically to ensure that your ownership and beneficiary details are accurate, and make plans for safely managing the plan as you age.

Tata AIA is committed to keeping you and your information safe via enhanced security measures updated regularly so that your private and confidential details are never compromised.  

If you have a Tata AIA life insurance plan, there are specific measures you can take if you suspect fraudulent activity.

• Never respond to claims promising over-the-top benefits, even if the caller claims to be from the company. Tata AIA believes in maintaining your privacy and does not send any unsolicited communication.
  
  

• To verify your policy details or report fraud, you can log into your policy account online or call the helpline number: 1860-266-9966. You can also email customercare@tataaia.com.
  
  

• When paying your premiums by cheque, make sure you address it to “Tata AIA Life Insurance,” followed by your policy number.
  
  

• Don’t surrender your policy unless you have thought it through. Before doing so or purchasing a new plan, verify the credentials of the caller. Ask for details like their IRDAI license and Tata AIA identity card.
  
  

• Don’t hesitate to report suspicious activity to any of the Tata AIA servicing points. Each report is heavily scrutinized, and appropriate security measures are taken in case of a lapse.
  
  

Now that you know about the red flags of insurance fraud, do keep yourself alert and stay safe.

 

L&C/Advt/2021/Dec/2088