Medical insurance is an essential that every person should consider buying at some point in their lives. This coverage will help pay the expenses for often costly medical procedures and services that would otherwise sap the life out of our funds and finances. While it might seem like a dream to have medical insurance in Michigan, there are certain instances or individuals that will make the process nothing more than a pain in the neck. Insurance fraud is very real and if you want to steer clear of a potentially bogus deal, then you should understand what insurance fraud is all about.
What you Need to Know About Insurance Fraud
There are two types of insurance fraud: buyer fraud and seller fraud. If you’re buying insurance, the type you should be on the lookout for is seller fraud. These are instances where your insurer will rip you off on a deal in order to make bigger profits and commissions. There are three common types of seller fraud, and each one poses a different threat to first time buyers and ill advised insurance shoppers.
- Ghost Companies – These are policies that come from companies or insurance agencies that don’t actually exist. In this case, the buyer purchases medical insurance in Michigan and pays the monthly premium only to find out that the company underwriting the policy doesn’t actually exist. Because the people who orchestrate this kind of insurance fraud are usually very skilled with the process of fooling others, many individuals fail to recognize that they’ve been the victim of fraud until they decide to file a claim.
- Premium Theft – In this particular seller fraud scenario, the insurance agent or broker does not forward premium payments to the company underwriting the policy, thus rendering the policyholder’s coverage null and void. The adviser pockets the fees until such time the policyholder decides to make a claim only to find out that their insurance coverage had already been pulled out due to non-payment.
- Churning – This refers to the instance when an insurance agent advises an insurance policyholder to cancel, renew, and open new policies in order to make more in terms of commissions. Because agents are given more incentives by their company when they’re able to open new policies for their clients, insurance agents that perform this particular type of fraud are more likely to make bigger income at the policyholder’s expense.