Sunday, October 4, 2009

Sneakiest Consumer Scams, Beware! - Part 4

Scam #6: "You don't need a physical to qualify for this low-cost health insurance."

The trick: An agent offers you a "union" health plan when you're not a union member. They don't require you to pass health standards required by other policies, the rates are low and the benefits are high. Claims might be paid initially, but are delayed and eventually stop.
This scam collects premium from many people as fast as possible, then skips out, leaving the victims with lots of medical bills.

What to do: Agents and insurance plans they sell should be approved by your state insurance department. So, avoid any salesperson that tells you the health insurance is exempted from state insurance laws or the agent doesn't need license. If you want to buy insurance, it's best to contact your state insurance department to make sure the company, agent and policy are properly licensed.

Scam #7: "Investment provides the guaranteed high returns and low risk that seniors like you need."

The trick: A broker promises above-market returns from a safe, low-risk investment to give your retirement savings a kick. Mostly, this scam involves bogus promissory notes, fake certificates of deposit or "prime bank" debentures or letters of credit that don't exist. In some case, seniors will be lured by a free meal at a fancy restaurant at a high pressure seminar designed to sell risky investments such as equity-indexed certificates of deposit that are not FDIC-insured and whose returns depend on stock-market ups and downs.

What to do: Never invest with a broker who finds you; find your own independently. If you're tempted, check the disciplinary record of nASD-registered financial professionals. Monitor your financial advisers, and don't give them the authority to invest your assets without your prior consent. Take note: Higher returns come with more, not less, risk.