5 Life and Health Insurance Scams Every Senior Should Know About

Health and life insurance scams are a big deal and they impact millions of seniors every day. There are numerous ways criminals use insurance scams to steal from seniors. Some of the more common scams include fake company fronts, unfulfilled promises, intentional misrepresentation of plan upgrades and changes, and identity theft.

Unfortunately, due to current events with COVID-19, there is an increase in both medical and life insurance scams, along with COVID-19 scams. The criminals behind these scams know that preying on the fear of others, such as how the pandemic affects seniors at a greater rate, will help sell their scam all the faster.

We all need life and medical insurance, so it is not something any of us can afford to eliminate to avoid being scammed. And since medical care costs are so high, many of us are delighted when we find discount medical plans or less expensive life insurance options with greater higher returns. Again scammers know millions of seniors are on a fixed income and use that to their advantage when selling their scams.

Worst of all, many of the scams we discuss in this article use trusted names, brands, and organizations to get us to give them money or disclose personal information like credit card numbers, social security numbers, and so forth. Because criminals impersonate trusted companies or organizations, it makes it challenging to know what is valid and what isn’t.

We understand navigating these muddy waters can be difficult. And we also know that insurance isn’t optional. This is why we have pulled together a list of common scams, how to identify and avoid them, and who to contact if you become involved in one of these scams.

5 Insurance Scams

• Impersonating navigators, assistors, connectors, and counselors
• Impersonating the government
• Medical insurance discount scams
• Identity theft
• Twisting and churning

Impersonating Navigators, Assistors, Connectors, and Counselors

The biggest problem with people who contact you claiming to be a navigator, assistor, connector, or counselor is that these are real professions. The insurance marketplace does employ legitimate people in such roles. Scammers, on the other hand, will pretend to be a helper but instead do quite the opposite.

First, what is a navigator, assistor, connector, or counselor? Well, they are those who work in the health insurance field but not for a particular insurance company. People in this role often help seniors find a policy or plan to help best serve that individual’s needs. Additionally, these aids may even help you get signed up with HealthCare.gov.

Unfortunately, those impersonating this role will attempt to pressure you into buying a specific plan because they are, in fact, with a particular insurance company. The company they work for maybe a legitimate health insurance company and these “helpers” are trying to sell you their insurance plan using shady tactics.

This misrepresentation of assistance will likely result in you getting insurance. Unfortunately, it may not be the best choice for your needs or budget.

How you can identify a real helper versus a scammer can be challenging; however, here are a few red flags to be on the lookout for:

• They will attempt to sell only one particular company’s plan
• They may speak poorly of other medical insurance companies
• They will use pressure sales techniques
• They will ask for payment upfront

If you are searching for health insurance, go online at HealthCare.gov to receive reliable, trustworthy assistance.

Impersonating the Government

Impersonating the government is a common scam across several markets, including health insurance. The imposter will call seniors and claim they are from a branch of the government, maybe from the Medicare & Medicaid Services or the IRS.

The scammer will then request you verify specific information to ensure your Medicare plan is not interrupted. Some scams may claim there was an error with a payout and you now owe them money, which they need to collect immediately.

Scammers will use scare tactics like, “you don’t want your Medicare plan to be put on hold do you?” or “If you don’t pay this outstanding balance immediately, you will incur substantial fines.”

The reality is that though the IRS or Medicare may contact you about soemthing, it is not done over the phone. If they need to get a hold of you they will send a letter.

Here are a few ways you can identify legitimate government communication versus a scam:

• The government does not call – Even if your caller ID says they are from the XYZ department, tell them you will call them back. Then look up the number and phone them to verify the validity of the call. Scammers will either hang up or attempt to badger you in dealing with the issue now.
• The government will not request payment over the phone.
• The government will not ask you to verify your full social security number or bank account number (especially as doing so puts you at risk for Social Security scams).
• The government will not talk to you about your insurance plan.

Medical Discount Plans Scams

What senior couldn’t benefit from a Medical Discount Plan? Well, scammers know that is a hot topic for most seniors and use it to their advantage, heck discount plans for health care darn near sell themselves.

Often how these scams work is that someone will call you and offer a way to save some money on your health care expenses, including prescription drugs. The scammers will tell you that their plan will not only save you money but also meets the requirements for Obamacare, so it’s a win-win situation.

However, the reality is much different, though the scammer will sell the medical discount plan as if it is a form of health insurance, the fact is they are two are very different things. It is common for these scammers to illegally represent these discount plans as insurance policies.

There are real medical discount plans out there, which is what makes validating their legitimacy challenging. However, even legitimate medical discount plans can be a type of scam. Medical discount plans are a type of membership and require the subscriber to use specific doctors or pharmacies. However, those clinics and pharmacies may not even be in your insurance network.

Also, some of these scams are strictly looking to steal your personal and financial information. Not all of these scams originate from a real company; it could just be an individual fishing to steal information. Or, if it is a valid business, some may make promises yet will not deliver or not disclose all of the information pertinent to the plan.

If you are considering a medical discount plan, take the time to do the research. Check out where you can receive discounted prices, how much of a discount you can receive, and if there are any restrictions.

How to tell the difference between a real plan and a fake one:

• If the person selling the plan is stating the healthcare discount is the same as insurance, you know its a scam.
• Take the time to research the company you can even check with your state’s commissioner’s office online to see if it is an actual insurance company.
• If you tell the person you want to take some time to think, and they try and badger you, it is time to hang up. They may be legitimate, but there is no special that will expire at the end of your phone call.
• The person selling the plan attempts to employ pressure sales techniques

Identity Theft

Many health and life insurance scams are after your identity and represent fake insurance companies. Identity theft insurance scams are common when it comes to insurance since there you always need to exchange personal information. Identity theft scams can come in the form of a phone call, internet pop up, or even email.

The high-tech identity theft scams will have legitimate-looking websites; some will even impersonate real companies with good reputations. However, the truth is that they have nothing to sell and no connection with the insurance company they are impersonating.

These scams can take on a few different forms:

• Phishing – This is when they request you to click on a link and install malware without your knowledge into your computer. This malware then spies on your computer activity, sending your user names, passwords, and account numbers back to the cybercriminal.
• The website will request your credit card or bank account number, Social Security number, and other personal information, not only to use your credit card to buy things but also to use your identity to set up more accounts in your name.
• A phone call is essentially the same as the website scam, but instead, you get to talk to the criminal. They will request similar information, all with the end goal of stealing from you.

Scams involving identity theft are quite common, and in 2019, $16.9 billion was stolen. However, there are ways you can safeguard yourself against this:

• Never click on a link in an email from an unknown source – If you are curious about the company, you can put their company name in a search engine and research them directly.
• Never click on a pop-up ad, only “X” out of it, and if you are curious about the claims on the insurance ad, research them independently of the ad.
• Never give your personal information over the phone until you are sure you know who you are talking to.
• Don’t allow yourself to be shamed or bullied into buying life or medical insurance. Take the time to do your research.

Twisting and Churning

Twisting and churning scams involve life insurance policies. These scam techniques are not conducted by some malicious criminals sitting in their basement preying on seniors. Instead, these scams are perpetrated by legitimate life insurance company employees.

Using twisting and churning sales techniques helps these life insurance sell policies. Both the sales agent and the life insurance company benefit from this scam.

Though these two methods are similar, there are a couple of differences. Churning is when promises are made that there is an instant cash reward for replacing current annuities with more expensive options. However, instead of the immediate cash bonus promised, it resets the clock on your policy.

And when you attempt a withdraw your money, you will get penalized for doing so “early,” even though you thought that the policy change did not impact the hold period from your previous policy. The truth is that new annuities rarely offer any perks to the policyholder and instead solely benefit the agent.

Twisting, though much like churning, it shares the same end goal of financially benefitting the agent. However, there is a slight difference, with twisting scams, the life insurance agent will attempt to convince you that your net worth is higher than when you originally signed up.

Those attempting a twisting scam will encourage you to upgrade your policy though they often fail to inform the policyholder of hidden fees, restrictions, and increased premiums. Also, they will either mislead you or not tell you that the change will reset the hold time of the policy for when you can cash out without penalty.

The best way to avoid twisting and churning scams are to take the time to read and understand the policy, especially the fine print. Also, a significant warning sign you are being scammed is that they will make false promises like:

• A better plan but without a higher premium
• The policy change will not impact your cash-out terms
• There are no additional fees to change to a higher plan
• The company suddenly realized your net worth is higher than they originally quoted

How to Report Insurance Scams

If you believe you are a victim of an insurance scam or you think someone has attempted to scam you, you need to report it immediately. You can call the FTC at 1-877-382-4357 or go online and file a complaint with the FTC at ftc.gov/complaint.

It is essential to report these crimes since it helps the FTC put an end to them.