When you think about life insurance fraud, you probably think about those cases where someone’s taken out a life insurance policy on a family member who then, through an elaborate series of intricate tricks and maneuvers, fakes their own death. The family then collects the life insurance, and the “dead” man retires in wealth on a Caribbean island.

Sounds to me like someone’s watched way too many episodes of Law & Order. The fact of the matter is that life insurance fraud is a real and all-too-common problem, and the victims aren’t the insurance companies but average folks like you and me.

So, to avoid life insurance scams, here are some things you can do:

• Know the market. Know what kinds of products are offered. Understand the difference between whole life insurance and term life insurance. Know what kinds of things go into determining your premiums, such as your age and whether or not you smoke. Know what kinds of things are usually covered and what aren’t, and know what kinds of coverage are worth the money and which ones aren’t.
• Shop around. Prices for premiums vary greatly from one insurance company to the next. It’s worth taking some time to do a little comparison shopping. Make sure you are comparing like products, too, as one company’s term life insurance will always be cheaper than any other company’s whole life insurance, for example.
• Know your insurance agent. I’m not saying that you need to buy life insurance from that annoying guy in high school who used to date your sister, Mary Pat. But it pays to know who your agent is. If you know the agent, you can avoid being taken advantage of. If you don’t personally know the agent, make sure to do some vetting. Ask to see their proof of licensure, for example, and check for references and reviews.
• Read the policy. Once you do sign up, make sure to read the insurance policy. Know what declarations and endorsements are attached to it, and make sure it includes what you think it should include. If you don’t receive a physical copy of your policy, ask your agent to get you one.
• Watch your bill. Make sure your premium payments are what you think they should be and what was quoted to you. If they mysteriously go up without an explanation, call the insurance company to find out what’s going on.

Are You Being Billed for Services You Have Not Received? If you have received medical or dental treatment that is covered by an HMO or an insurance company, you will receive an “Explanation of Benefits” statement listing the services for which benefits have been paid. Review it carefully to ensure that your health care provider has not “bumped up” your claim (i.e., overstated services provided in order to receive a higher payment), or charged for services you did not receive. Contact your insurer immediately if you feel there are discrepancies. Fraudulent claims payments translate into higher insurance premiums for all of us.

What If You’re Involved in an Automobile Accident? Call the police to the scene and make sure that the details of the accident are documented and the identities of the occupants of the other vehicle are verified. Be suspicious if the driver of the other vehicle insists there is no need to call the police. That driver’s insurance card may be fraudulent and his car uninsured.

Auto Insurance Fraud is a multi-billion-dollar problem nationwide. Watch out for these common scams:

* The staged accident – A vehicle filled with people will stop suddenly in front of you, setting you up as the cause of a rear-end collision. The “victims” will then file costly multiple medical and damage claims using doctors and lawyers who are part of the scam.

* Steerers – These individuals will solicit the injured or allegedly injured parties and direct them, for a “referral fee,” to lawyers, doctors and/or medical facilities that are part of the scheme. Be on the lookout for steerers at accident scenes and don’t become their victim.

* Inflated claims – If you are in an automobile accident, be sure you know the extent of the damages to your own car and the other vehicle and carefully review claims. Vehicle owners and body shops frequently inflate estimates for damages and then either perform other repairs not related to the accident or simply keep the extra money.

BE ALERT! IT’S YOUR MONEY.

Think twice before replacing an existing life insurance policy with a new one. The new policy may have exclusions or waiting periods for pre-existing conditions that are covered by your current policy. And premiums are likely to be higher because you are older. The Insurance Department protects consumers by requiring agents to provide prospective purchasers with pertinent facts when that purchase will cause the buyer to surrender, lapse, or in any way change the status of an existing life insurance policy. Department Regulation 60 requires this full disclosure so that prospective life insurance purchasers can make decisions in their own best interest. To view the full text of Regulation 60, select this link.

Don’t allow high-pressure salesmanship to persuade you to sign up for a type of policy or certain coverages that you are not sure you need. Take time to decide what’s right for you.

Read your policy carefully before you sign. If you have questions, ask your agent or broker, or your insurer. An additional source of information and help is the Insurance Department’s Consumer Services Bureau. For additional consumer information, select this link.

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