Finance and Credit Professional

Insurance fraud. It happens daily. There are a number of bogus health insurance companies and agents in Dallas, Houston or anywhere else in Texas who will take your money and run. So, before you purchase health insurance for your employees or your business, make sure the insurance company you're dealing with is legitimate. Start by checking your insurance agent's credentials to be sure he or she is licensed to sell insurance in Texas.

An insurance scam artist may act without a license or use fictitious documents to appear legitimate. The following information will provide what you need to make the right decision when purchasing health insurance for your business or individual employees. The scammers are out there just waiting for you to take the wrong step. Make sure you know what's waiting for you before you get scammed out of a lot of money.

In the last couple of years, the Texas Department of Insurance (TDI) has shut down 51 agents and 10 companies for selling unauthorized insurance. There are currently 376 open investigations against suspected unauthorized insurance scams in Texas.

The first thing is to check to see if a potential company is authorized to sell insurance. Then check to see if your insurance agent or agency is licensed. If you fail to find your company or insurance agency, don't assume it's unauthorized. Check with your agent for more information. Or verify by calling TDI's toll-free Consumer Helpline weekdays between 8 a.m. and 5 p.m. at 1-800-252-3439. Insurance company data is usually updated at 7 a.m. each business day.

Businesses, school districts and individuals are bilked out of thousands of dollars each year by scam artists who misrepresent themselves as insurance agents. So, while the search for affordable health insurance can be a daunting task, don't blindly follow an agent. But did you know you run the risk of purchasing a phony policy even if you work with a legitimate agent? At times, even experienced agents can unknowingly sell illegal insurance products. Though honest agents will do their level best to avoid such circumstances, it can still happen. Worst of all, you could be on the hook for a wide range of costs and expenses that you thought your insurance was covering.

The typical health insurance scam moves pretty fast. Scam agents flood the market to help generate as many quick sales as possible. Often, payments will be requested up front to help ensure they get as much money as possible before they disappear. After the fake agents have reached their goal, they simply sit back and watch the monthly payments roll in. Then, just as quickly as they appeared, they are gone, only to re-appear later under a new name and a new scam. The individual or company may never know they've been duped until, after thousands of dollars in premiums have been paid, they then try and file a claim.

It's important to know what to look for. Here are some of the most common signs that an insurance company may be a scammer:

They claim extremely low rates, or offer minimal or no underwriting.

The health plan will accept almost anyone, including those with pre-existing or serious illnesses.

The plan claims to be federal, not state regulated. (ERISA or union plans, for example)

Sales pitches that avoid the word "insurance" or the use of certain insurance terminology even though it operates like insurance. For instance, it pays "consultant fees" instead of commissions, or refers to premiums as "contributions."

The product claims to be "fully funded," "fully insured," or "reinsured" but agents are not told the name of the carrier insuring or underwriting the product.

Sometimes the path may seem clear and the choice easy, but in an effort to save money, there may be some things that aren't clearly visible at first glance. So how can you avoid the scammers? Check out each insurance company and agent you deal with. It only takes a little extra time, but the effort could possibly save you headache, heartache, and thousands of dollars down the road.

About The Author :

Pat Carpenter writes for Precedent Insurance Company. Precedent puts a new spin on health insurance. Learn more at Precedent.com

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