The article refers to Texas but the lesson can be
applied in most places.
Older Texans´ special need for financial security and their
concern about burdening their families make them targets for insurance
fraud and misrepresentation.
signs of potential fraud and misrepresentation, along with tips
for protecting yourself include:
or other insurance sales representative urges you to pay cash. Pay
only by check or money order made out to the insurance company or
insurance agency -- not to the individual agent.
A salesperson or telephone caller claiming to be from Medicare or
the Social Security Administration makes an insurance sales pitch.
This is against the law. Get as much information as possible and
file a complaint with TDI against anybody who claims to be from
Medicare, Social Security, health insurance or another government
agency and tries to sell you insurance or health
Someone uses high-pressure tactics like telling you this is your
last chance at a special deal or appealing to your sympathy with
a hard-luck story. Ask someone you trust to be present during an
agent´s visit to your home. Don´t buy on the first visit.
You receive a mailer offering special information on Social Security
or new federal tax laws if you´ll just return a postcard.
The mailer looks as if it came from the government and might even
have a Washington, D.C., return address. Before giving out any information
about yourself, be aware that the card may bring an agent to your
door with an unwanted -- and possibly high-pressure -- sales pitch.
You are told you need an insurance policy to avoid burdening your
family. Resist appeals to guilt. Buy only the insurance you need
and can afford.
A salesperson urges you to cash in your certificates of deposit
(despite the interest penalty) and put the money into investments,
annuities, or life insurance policies. Seek advice from your accountant,
attorney, financial adviser, or a trusted friend or relative before
committing to any unsolicited investment. The "investment"
might be a life insurance policy or an annuity. Interest rates on
life insurance policies should not be compared to yields on CDs
or other financial investments, because part of every premium dollar
goes to cover the cost of the insurance (death benefits). True yields
on life insurance policies might actually be negative for the first
three to five years or so. Read life insurance policies carefully
to understand how the cash value is calculated and what the early
withdrawal penalties are. Remember that the primary purpose of life
insurance is to replace a family´s lost income if a wage earner
dies prematurely. Life insurance rates can be quite high for people
past retirement. In the case of annuities, pay special attention
to the payout starting date and what would happen should you die
before or during the payout period.
A salesperson urges you to cash in your existing life insurance
policies and invest the cash value in new ones that supposedly will
yield a higher return or provide more insurance. This practice called,
"churning," may harm the policyholder financially, because
the cash value of the new policy will build very slowly. If you
bought the original policy at an earlier age, the new policy might
cost more and offer less coverage. In addition, if you should die
during the first two years of a new policy, the insurance company
can contest claims for the death benefits. Many companies pay larger
commissions to agents for new policies than for renewals. Ask yourself
whether the agent has your best interest in mind or is just shooting
for a higher commission.