planet antares scam insuranceInsurance is touted as a good thing to have, and in many cases, insurance is required to protect the value of a large asset like a home or automobile. Insurance lends itself to scams because it’s one of those things you pay for, but may never actually use.

Usually the term “insurance fraud” brings to mind visions of a policyholder trying to make an insurance company pay out on fraudulent claims. Unfortunately, insurance fraud can go the other way, too. Unscrupulous insurance agents can pocket your premiums, issue fake insurance policies or sell you coverage you don’t need.  To help protect yourself from being victimized by insurance scams, here are a few tips.

Insurance is heavily regulated by each state, so check with your state’s insurance commission to make sure the sales agent is licensed and in good standing, and that the insurance s/he is trying to sell is approved for sale in your state.  Ask the insurance commission about any complaints that have been lodged against the agent or the insurer. Find out whether/how these complaints were resolved.

Avoid policies that are discounted by more one-third the cost of similar policies from different insurers.  If an independent agent really pushes hard for you to purchase coverage from one particular company, consider this a red flag. Super cheap insurance may not provide the coverage you need, or may be an outright scam.

Your sales agent should be your introduction to the company and should service your policy, should you need to make a claim, but you should receive your policy documents and premium statements from your insurance company.  If you don’t receive this documentation within 30-60 days of applying for a policy, call the insurance company directly.   When you do receive your policy statement, contact the insurer (not the agent) to verify that the policy is valid through the expiration date stated on the declaration page and that your premium amount matches what your agent has told you.

Understand what you’re buying and how much the monthly premium will be. Once you receive your policy, check your policy statement carefully to make sure your agent didn’t “slide” unneeded coverage that you didn’t ask for or specifically rejected into your policy. Understand when your coverage will expire; how the policy will renew; and when you’ll be notified of increases in the premium.

Do not pay your insurance premiums in cash, even if the agent insists upon it. Make out monthly premium checks to the insurance company rather than to the agent. Better still, set up an automatic billing arrangement with your insurer to withdraw premiums directly from your bank account.

Avoid purchasing other products (like investments) from an insurance agent.  Avoid working with an agent that encourages you to sell whole-life policies and use the proceeds to invest in something else.  Do not give your insurance agent “power of attorney,” sign blank insurance application forms or allow your agent to fill out beneficiary statements on your behalf.