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Life insurance pay-outs are large amounts of money, so it’s no surprise that criminals operate life cover scams! There are many different types of life cover scams but there are ways to spot them and ensure your loved ones benefit from your life insurance policy as you intended!
Recognising common life cover scams
A life cover scam will result in the premiums and/or the pay-out from a life cover policy making its way into the bank accounts of criminals. Sadly, this means that legitimate beneficiaries often lose out and don’t receive the funds they need after a loved one’s passing. When you know what life insurance scams are and how they work, you can recognise and avoid them!
Life cover scam #1: Request for personal information or money
In this scam, a criminal poses as an agent of a reputable insurer, some even set up copycat websites to ensure that when you research them, they appear legitimate and reputable! The aim is to get your personal details such as ID number and bank account details that they can use them to commit fraud, such as by opening accounts in your name and running up bills. Often the first time that people hear about these scams are when a store calls them wanting to know when they are going to pay their account!
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When someone wants your personal details or money:
- Check with the insurance company they say they represent that they are actually in their employ or partnered with them and that the person is a licensed representative with the Financial Services Conduct Authority. Always use the contact numbers on the insurance company’s website to confirm this, not the number the person gives you!
- If someone wants money, say no! Life insurance premiums are paid via electronic means, usually debit order, so you don’t need to give someone cash, ever!
- Make sure there is a reason for sharing your details. If it is to pay a premium, check the policy is valid, and always request a DebiCheck debit order. Don’t share personal information without knowing why and who has access to it.
If you are getting a life insurance quote only your name, age and gender should be requested, sometimes your ID number and occupation. Other details such as your bank account details are not needed. However, when you are completing a life cover application form, all your personal details are required. This will be in a formal setting with forms (either on the phone or digital), and there will be many questions to answer including questions about your health, occupation and family. If a person wants to skip over these or says they are not necessary, the chances are high that they are they are running a scam!
Life cover scam #2: Fake beneficiary scam
You nominate your spouse as the beneficiary on your life cover policy, but when you review your policy, you notice there is another beneficiary nominated! Should you pass away, your spouse won’t get the pay-out! This is one of many beneficiary scams. Here, a criminal has changed the beneficiary details so they can benefit and receive the pay-out when you pass!
Another fake beneficiary scam is when a criminal approaches you and tells you a recently passed loved one named you as a beneficiary on a policy! They offer to help you claim, and as you are grieving your loved one, you are happy to let someone else do the admin work! Some of this work involves paying an outstanding amount, such as a premium, to ensure the pay-out. This is life insurance fraud! The money you pay makes its way to the criminal, and there is no such policy, so you are out of pocket!
If you encounter a fake beneficiary scam
- If your policy beneficiary has changed, change it back to who it should be, and notify your insurance company of the change and fraud. Also, ask your insurance company to change any login details to your online policy management system.
- If you are approached by a person saying you are owed money, find out by which insurance company and deal with them yourself. They will tell you if there is a policy or not, and how to claim.
Life cover scam #3: Fake life cover policies
Criminals love a steady income stream, and what better way to get this than by setting up life insurance policies and taking the premiums! These criminals create authentic looking websites and look legitimate! But they are not! And any policy you take is fake and won’t pay your beneficiary a lump sum amount.
According to the Insurance Crime Bureau, you should always be alert, treat strangers with the necessary caution and question anything that sounds too good to be true.
Don’t become a victim of a fake life insurance scam
- Always check the insurer is registered with the Financial Services Conduct Authority. If they are not, or say their registration is pending, do not give them information or money and stop all contact with them.
- Double check websites to see if they are legitimate – look for spelling errors, unusual domains (not co.za or .com) and check contact details.
Life cover scam #4: Pressure tactics to buy or switch policies
Criminals approach you and tell you that you can get a much better deal, such as a lower premium or more cover or more benefits! You love a good bargain, so you share information, cancel your policy and say you’ll take a new one. Problem is, the new one is a fake policy and the premium you pay eventually makes its way to the criminal.
Avoid a switching scam
- Never be pressured into making quick decisions, it is not necessary! Taking out life cover does not require you to make a decision in a few minutes, especially if you have a policy already. You can take your time to make the right decision.
- When you switch policies in South Africa, legislation requires that all the consequences are explained to you, including any new waiting periods that may apply. If these are not explained the switch request is not legitimate – do not go ahead.
Take preventative measures
You can use the tips above to identify and avoid specific life insurance scams, but you should also:
- Review your insurance policy regularly to make sure the banking and beneficiary details have not changed
- Keep in regular contact with your insurer, who should contact you a minimum of once a year
- Check your credit score and report every few months – any premiums or accounts you are paying will reflect, so you can check if there are any accounts opened fraudulently in your name
- Make sure you always deal with licensed insurers, always!
How to report life insurance fraud
If you suspect fraud on your policy, report it to your insurance company and the South African Insurance Crime Bureau. You can also report fraud to the South African Police Services.
If you suspect your personal details have been stolen, report this to your bank, any other financial services providers you use, as well as the South African Fraud Prevention Services.
1Life Insurance is committed to transparent, flexible insurance policies
1Life Insurance is a licensed insurer and financial services provider, offering life cover policies that can be tailored to your needs and budget, with sums assured from R300 000 up to R10 million. We make life insurance easy to take out and easy to manage - and we pay valid claims quickly. We have been voted an iconic brand 2 years in a row, in the 2022/2023 and 2023/2024 Ask Afrika Icon Brands Awards and have been recognised as South Africa’s #1direct life insurer in the annual Swiss Re Reports for 11 consecutive years! Our policyholders are always top of mind, and in 2023 and 2022, we had the highest net sentiment in the PWC SA Insurance Index Report. Contact us today to find out how we can change your life!
Be aware and avoid life insurance fraud
Be vigilant and aware when it comes to life insurance because fraudsters want your money! By making sure you deal with licensed insurers and representatives, and regularly checking your policy details, you can avoid the life insurance scams and the criminals!