advertisement
Forums

The Forum is sponsored by 
 

AAPL stock: Click Here

You are currently viewing the Tips and Deals forum
Possible PSA: Insurance Company Scam?
Posted by: Ammo
Date: April 09, 2010 11:47AM
This is a long story, so please bear with me. However, if my suspicions are correct, it may helpful for some of you to know about.

Recently my wife received an offer from the insurance company that issued her life insurance policy many years ago. It said they were offering her the opportunity to reduce her premium by $5/month if she switched over to a completely new policy. However, a footnote mentioned that new coverage would depend upon her answers to some simple questions about her health.

Since she took out the original policy, she has had a few health problems that we believe would cause her to be rejected for the new policy for "pre-existing conditions."

Of course, we immediately tossed the offer in the trash, but then began to wonder if this offer was a sneaky attempt by her insurance company to flush out what they consider high risk policy holders. At the very least, if she applied for the new policy and disclosed her more recent health history, the insurance company could red flag her as someone to scrutinize closely if she made a claim. Also, I may be wrong, but I thought insurance companies maintain a common database on policyholders that any of them can access. Am I being way too paranoid about this?



Edited 1 time(s). Last edit at 04/09/2010 11:51AM by Ammo.
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: ztirffritz
Date: April 09, 2010 12:09PM
In a few years it won't matter because they can't refuse to offer insurance to her.



**************************************
MacResource User Map: [www.zeemaps.com]#
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: Grace62
Date: April 09, 2010 12:15PM
Quote
ztirffritz
In a few years it won't matter because they can't refuse to offer insurance to her.


This is about life insurance, not health insurance.

I think Ammo's suspicions are correct, they may be planning to cancel policies if they discover health problems not previously disclosed.
Are they trying to get you to switch from term life to whole life? Our insurance company sends those solicitations on a regular basis. Otherwise I don't see any benefit to the life insurance company to put you into an identical policy for a lower premium...what exactly are they trying to sell you?
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: neophyte
Date: April 09, 2010 12:18PM
The offer was for a new LIFE insurance policy, right? The new "non-refusal for pre-existing conditions" clause will affect only health insurance policies, right?
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: Winston
Date: April 09, 2010 12:22PM
Quote
ztirffritz
In a few years it won't matter because they can't refuse to offer insurance to her.

I think you are thinking about health insurance. This is about life insurance. I don't think the rules on life insurance are changing (although I could be wrong - but haven't heard anything about it).


I don't know much about the life insurance industry, but I doubt there is a central database shared among companies. Unlike with health insurance, I don't think life insurance companies can raise your premiums once you are under a given policy. So I don't see any advantage to the company to flushing out "high risk" policy holders. Seems like worst that could happen is that they deny her on the new policy and she'd stay under the old one.

But I do think it's worth asking questions and wondering what's in it for the insurance company to have her change policies.


Good luck.

- Winston



------------------------
Be seeing you.



Edited 2 time(s). Last edit at 04/09/2010 12:23PM by Winston.
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: raz
Date: April 09, 2010 12:53PM
Back to the original topic ...

I believe this is a well-known scam which falls under the category of 'churning'. The basic thrust is that the accrued cash value of the policy is used to (a) pay down the cost of the new policy, and (b) generate a commission for the agent.



--------------

Embarassing myself on the Internet since 1978.
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: AllGold
Date: April 09, 2010 01:22PM
What kind of policies for new and old, term or whole life?

NEVER, EVER replace a whole life policy for any reason if you have had it for more than a year.

There is a common database for health insurance (MIB) but AFAIK, not for life insurance.







Edited 1 time(s). Last edit at 04/09/2010 01:46PM by AllGold.
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: Acer
Date: April 09, 2010 01:31PM
raz is, um, dead on here:

[www.thinkglink.com]
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: Ammo
Date: April 09, 2010 01:48PM
The policy I referred to in my original post is for simple term life insurance. The flyer we were sent made a point of saying that you must terminate your current policy in order to receive the new policy. Our fears were based on the fact that it didn't specify whether you would retain your current policy if you were rejected for the new one.
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: AllGold
Date: April 09, 2010 01:57PM
So is the current policy guaranteed renewable?



Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: Ammo
Date: April 09, 2010 03:05PM
Quote
AllGold
So is the current policy guaranteed renewable?

As long as she keeps paying premiums and breathing. Of course, the premium rises each year.
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: Winston
Date: April 09, 2010 03:14PM
Quote
Ammo
The flyer we were sent made a point of saying that you must terminate your current policy in order to receive the new policy. Our fears were based on the fact that it didn't specify whether you would retain your current policy if you were rejected for the new one.

That seems like a valid concern. If they really wanted to give you a better deal I'd think they'd make that clear. Also, unlike with health insurance (where it's reasonable not to allow two policies at once) with life insurance there is no reason not to allow more than one policy at a time. They should each stand alone.

Although maybe it was a valid offer. I am constantly astonished at the stupidity of many marketing pitches, particularly those from credit card companies. They may actually have value, but the way they are promoted makes it look like they are trying to pull one over on their customers.


Good luck.

- Winston



------------------------
Be seeing you.
Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: AllGold
Date: April 09, 2010 03:27PM
Quote
Ammo
Quote
AllGold
So is the current policy guaranteed renewable?

As long as she keeps paying premiums and breathing. Of course, the premium rises each year.

But it's probably only renewable up to a certain age, like 65 or 70. Even if it's guaranteed renewable beyond that age, it will become prohibitively expensive.

I have heard less than 1% of term policies ever pay a death benefit. That's why they are so cheap; 99% of the people pay premiums but never get anything back.

A whole life policy is a lot more expensive but you (typically) pay premiums on it for only 20 years. After the policy matures, you don't pay a dime but still have the full face value in effect (actually, most policies increase in value by applying dividends back to the policy). After it matures, you are 100% guaranteed to get at least the face value payout, no matter what changes to your health may occur. Obviously when you die, your beneficiary gets the death benefit. But If you live to age 100, the company just writes you a check.



Options:  Reply • Quote
Re: Possible PSA: Insurance Company Scam?
Posted by: DRR
Date: April 09, 2010 03:45PM
Is it really worth the risk to possibly muck up your policy to save $60 a year?
Options:  Reply • Quote
Sorry, only registered users may post in this forum.

Click here to login

Online Users

Guests: 117
Record Number of Users: 186 on February 20, 2020
Record Number of Guests: 5122 on October 03, 2020