5 Ways to Spot a Bogus Insurance Policy
By Contributing Author, 14 June 2016
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We've all heard or read stories of rogue insurance agents scamming unsuspecting victims into buying fake insurance policies. Such fraudulent activities often involved illegal or dishonest insurance representatives defrauding buyers by collecting premiums for bogus policies, misrepresenting products, or using a fictitious payee.
A lot of times, a policyholder may not even know that the insurance policy is fake until the person tries to make a claim from the insurer. By the time the person realises it, it's already too late. Therefore, as a consumer, you should always stay alert and look out for red flags so that you won't end up in a dire financial situation.
Here are five tips to ensure that you are dealing with a legitimate, licensed insurance representative and that the insurance policy you are getting is genuine and covered by the insurer.
A lot of times, a policyholder may not even know that the insurance policy is fake until the person tries to make a claim from the insurer. By the time the person realises it, it's already too late. Therefore, as a consumer, you should always stay alert and look out for red flags so that you won't end up in a dire financial situation.
Here are five tips to ensure that you are dealing with a legitimate, licensed insurance representative and that the insurance policy you are getting is genuine and covered by the insurer.
1. Make sure your insurance representative is licensed
It is illegal to sell insurance without a licence in Singapore. Insurance representatives or financial advisers have to undergo rigorous training and pass at least three examinations before they are allowed to sell financial or insurance products.
You should only purchase policies from a licensed agent who is authorised by the Monetary Authority of Singapore (MAS). To check that the person is a licensed representative, request for the person's name card, which should have the MAS representative number printed on it. With the number, you do a search on MAS's Register of Representatives web page, which has a public record of individuals who conduct regulated activities under the Securities and Future Acts and provide financial advisory services under the Financial Advisers Act. Alternatively, you can call the insurance company to confirm the person is a licensed agent.
You should only purchase policies from a licensed agent who is authorised by the Monetary Authority of Singapore (MAS). To check that the person is a licensed representative, request for the person's name card, which should have the MAS representative number printed on it. With the number, you do a search on MAS's Register of Representatives web page, which has a public record of individuals who conduct regulated activities under the Securities and Future Acts and provide financial advisory services under the Financial Advisers Act. Alternatively, you can call the insurance company to confirm the person is a licensed agent.
2. Ensure that a proper sales advisory process is conducted and documented
A licensed representative needs to perform a proper sales advisory process with the client. This includes identifying your financial objectives, protection needs and your budget. Based on the information provided by you, he then recommends a suitable product and explains in detail the product features, including premium, sum insured, maturity, coverage, etc. The information should also be properly recorded in factsheets, spreadsheets or other forms of documentation. Keep the document as it will be useful for you to check against the actual policy should you decide to purchase it.
Be aware if none of the above is properly conducted. You should also be cautious if the representative makes bold claims that are not indicated in any of the documents provided, for in his eagerness to sell, he might have misrepresented the product. Ask questions, or if necessary, ask him to point out exactly where his claims are indicated in the documents. If the agent is evasive when answering your questions, that's another red flag.
Be aware if none of the above is properly conducted. You should also be cautious if the representative makes bold claims that are not indicated in any of the documents provided, for in his eagerness to sell, he might have misrepresented the product. Ask questions, or if necessary, ask him to point out exactly where his claims are indicated in the documents. If the agent is evasive when answering your questions, that's another red flag.
3. Request for a receipt
If you decide to purchase the insurance policy and pay for the initial premium in cash, always ask for a receipt to be issued under the insurer's name. If the payment is made with a cheque, issue it directly to the insurer. Never hand over cash without any form of acknowledgement, or write a cheque to the representative or the insurer's associated company's name. This way, you know that your payment is made directly to the insurer and not to any other person.
4. The policy document
Once you have purchased a policy, you should receive a policy document containing the contract and a welcome letter within one month from the payment of the premium. If you do not receive anything after a month, you may wish to contact the insurer.
When you receive the policy document, check that the key information such as the product name, sum insured, premium, coverage, the name of the policyholder and other personal details are correct. Be sure to notify the insurance company at once if something is amiss. Wrong information could be due to genuine human error or the representative submitting false information, such as incorrect date of birth to obtain a cheaper premium or additional coverage without you knowing or agreeing to it. This is important because incorrect information could mean that any claim you make in the future may be denied.
Importantly, do not throw away the policy document. It should be kept with your other important personal and legal documents.
When you receive the policy document, check that the key information such as the product name, sum insured, premium, coverage, the name of the policyholder and other personal details are correct. Be sure to notify the insurance company at once if something is amiss. Wrong information could be due to genuine human error or the representative submitting false information, such as incorrect date of birth to obtain a cheaper premium or additional coverage without you knowing or agreeing to it. This is important because incorrect information could mean that any claim you make in the future may be denied.
Importantly, do not throw away the policy document. It should be kept with your other important personal and legal documents.
5. Follow up by your insurance representative
Your representative should be in touch with you to follow up on your insurance purchase. If your representative has not done so, you should contact your insurer directly to check if the person is still representing you or working for the insurer. It also ensures that the representative is not being elusive or irresponsible.
Buying insurance is an important decision, so do take as much time as you need to choose the right policy for you or your family. Most importantly, don't let your representative pressure you into buying anything you don't need.
Buying insurance is an important decision, so do take as much time as you need to choose the right policy for you or your family. Most importantly, don't let your representative pressure you into buying anything you don't need.
