Selecting the best life insurance policy that covers your needs is a big life decision. Keep in mind that you are going to enter a commitment that could last up to 30 years—or more. This is why getting a trustworthy financial advisor or an insurance agent to help you make a decision is a great idea. However, there are con artists out there that sell fraudulent insurance policies and take advantage of people who don’t know much about them.
To help you spot a life insurance scam, here are some of the most common ones.
Stranger Owned Life Insurance (STOLI)
If you allow a person who does not have any type of insurable interest on you to get a policy under your name, this is what insurers call stranger owned life insurance (STOLI). Seniors are commonly known to take out a policy for themselves with the intention of passing the ownership to business investors in exchange for a hefty amount.
If someone comes to you with this kind of arrangement, you have to remember that this is deemed illegal in a lot of states. It is also a practice that is frowned upon by most insurance companies.
Exaggerating Your Net Worth
There are some insurance agents who will encourage you to exaggerate your net worth on your application for a life insurance so you can get one with a bigger coverage. By doing so, the agent will also get a bigger commission.
What usually happens in this situation is that the policyholder will find the premiums too expensive and stop paying it after a few years. There are also agents who don’t expect clients to pay at all. In fact, there have been cases in the U.S. where an agent was taken to court after getting millions of dollars’ worth of commission by selling free life insurance.
If you want to make sure that you are not a victim, you have to ask for a copy of your application form and make sure everything is accurate.
Pensions for the Elderly
Annuities is a type of financial product that is offered by most insurance companies where the payments are invested to provide income for the policyholder after retirement. If you are holding a lot of money and you want to have a comfortable life after retirement, an annuity can be a smart investment. Keep in mind that you can only avail of annuities if you still have plenty of years to work. There are companies that refuse to pay out if you don’t leave your money with them for at least 10 years.
Some financial advisors and agents manage to sell annuities to seniors, leaving them without a major source of retirement income for years, but providing the seller with the commission. If your agent is pushing a retirement financial product when you’re already in retirement, make sure you know when you’ll get paid before signing up.
To make sure that you are safe from scams, it’s best to choose a trusted insurance company. At Roper Insurance, our mission is to ensure that we protect our clients and offer them policies that they can afford. Learn more about our products and services by calling our agency at (828) 697-6709. You can also request for a free quote by CLICKING HERE.