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How to Spot Fake Health Insurance Plans?

“350 people duped in fake health insurance scam”, “The Insurance Regulatory and Development Authority of India warns about fake Coronavirus insurance” and “Beware of health insurance claim agents.” You might be reading these headlines in newspapers, on a regular basis.

Health insurance fraud and scam is a major challenge in India. Not only do health insurance companies face fraudulent claims, health insurance seekers, too, end up in this trap. What are the ways in which you can identify fake health insurance plans and stay away from fraud? Let’s find out.

Overaggressive Salespeople

You may have received emails or calls from people trying to sell health insurance. And you may have fallen for them. But if, during your interaction with them, you feel they are being over-aggressive and pushy, treat it as a red signal. 

In such cases, research and look up the sales person’s name and contact number online. Call the insurance company on a genuine phone number and find out if they have a sales representative by that name. You can also insist that the person shows employee id or agent id before you start talking to them. Find out all the information that ensures the sales person is actually from the insurance company and is reliable.

Related blog: A Layman’s Guide to How Health Insurance Works

Insurance plans that offer better deals for quick sign-up 

In a competitive world, even insurance companies try hard to push sales. But that does not mean they can make impractical promises and offer freebies. It is possible that you are offered better deals if you buy something right away when you may have gone out for grocery shopping. But insurance is a serious matter and no professional insurance company or insurance agent would rush you into making a decision on the spot. In fact, IRDAI regulations clearly prohibit such attempts to wean customers with such promises. 

Credible health insurance companies and agents would take time to explain all the details to you, as well as give you enough time to make your decision. So, if someone gives you a deal asking you to sign right away, it is a signal for you to think with your feet.

Unbelievable low cost

If the cost of the health insurance plan offered to you is unbelievably low, it’s a warning sign. It is possible that someone or some company is trying to sell a fake health insurance plan to you. Too much undercutting is not sustainable and you can be sure it is a trap. 

Benefits that seem too good to be true

If you come across health insurance plans that promise benefits that seem like the stars, it may be a bogus insurance plan or one that is smartly advertised in order to push sales. Look at the plan details carefully. Scrutinize every line. Make calculations, if you have to, to know if the benefits listed could actually be true. The best way is to cross question the sales person on the finer aspects of the policy. For example, as them if a particular hospital is empanelled. If he says yes, call up the hospital in front of the salesperson and verify. That will put the salesperson on guard and they will top peddling false promises. 

Health insurance company not registered with IRDAI

The Insurance Regulatory and Development Authority of India is the authorized body that regulates insurance matters in India. Every insurance company has to be mandatorily registered with IRDAI. If you’re dealing with an insurance company that is not registered with IRDAI, it is not a legitimate company and it’s best to walk out of their door. IRDA assigns a unique registration number to every insurance originator and you can also cross verify such details with the IRDA website. 

Insurance agents not licensed

Just like insurance companies need to be registered with the IRDA to sell insurance products in India, selling agents too need registration and licenses to be able to sell insurance. Always ask for your insurance agents’ license and ID card if you’re dealing with a new person and a new company.  

If a company insists on cash payment

It is mandatory to pay insurance premiums only by banking channels like cheque / DD / NEFT / RTGS / IMPS / UPI etc. Nowadays, it is a lot more convenient and safer to pay health insurance premium online. Remember, when you buy health insurance and want to claim tax exemption under Section 80D, then you cannot claim exemption if the premium is paid in cash. If your insurance agent insists on cash payment or online payment to his personal account there is something seriously wrong. Clearly, someone may be trying to sell a fake insurance plan to you. Once you make the payment, make sure you receive the receipt of payment, and it should be a stamped receipt on the company letterhead. 

Fraudulent companies set up in the names of genuine insurance companies

This is called spoofing and is quite common so you must be doubly careful. When looking for a health insurance plan online, be alert; you might be on a fake company’s website. Note these points:

  • Fraudsters might create fake websites with names of real and genuine health insurance companies. 
  •  They may steal the license number and logo of real companies and pose as genuine companies.
  • They might list health insurance plans and healthcare products that don’t exist.
  • They might have online payment systems in order to avoid meeting face-to-face and scamming money online by selling online.

When you access any website online, first cross check the website address with IRDA. Also, payment sites are always secure and their internet URL will begin with https:// and not http://. One of the ways to control the above-mentioned frauds and fake health insurance plans is to raise a red alert by informing the police, cybercrime authorities if it is an online fraud or the insurance company whose name is being used to provide bogus health insurance policies. 

Smart ways to avoid fraud when buying health insurance plans

Now that you know the different ways in which fraudsters can try to dupe you and sell fake insurance plans, it’s time to make note of a few ways in which you can avoid falling prey to them. 

  • Research about the insurance company that you’re considering. Look up its website, its mention on the IRDAI website and reviews on the Internet. It is possible that if someone has faced fraud from the company, they may have shared a review about it online. You can visit the discussion and chat forums for such signals.
  • When buying a health insurance plan, ask for a copy of the policy document and go through it thoroughly. If your intuition tells you that it might be fake stop the transaction. It is always better to be safe than sorry.
  •  Always compare health insurance plans of different companies. While comparing, you might come across clauses or words that may not seem right or may not be mentioned by any of the other health insurance plans that you’re considering. 
  • Generally, insurance companies follow a call-back system. Once you share your contact details on their website, they would call you back. However, if you receive a call from a company that you never approached or shared your contact details with, it’s better to avoid sharing any information with such a caller.

To sum it up

Health insurance scams are on the rise in India. Health insurance companies take all necessary precautions to keep their customers safe from frauds. However, fraudsters are smart and with a lot of processes moving online, cybercrime is an easy mode to cheat customers. As customers, always be aware and alert. Don’t make hasty buying decisions. Do proper research. Take time and make an informed purchase, always.

FAQs: How To Spot Fake Insurance Companies

Can health insurance plans be fake?

Yes, health insurance plans sold by fraudsters are fake. Health insurance scam is on the rise and there is an increasing number of cases about customers falling prey to buying fake insurance policies.

How can one avoid buying a fake health insurance plan?

As customers, it is your responsibility to do through research and background check about health insurance companies and health insurance agents. There are many ways to spot fake plans. For e.g. if the benefits of a plan seem too good to be true, or if the insurance plan is being sold at a significantly low price compared to other similar plans, it could be fake.

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