Faking It & Fraud

Is your health policy legit?
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This story appears in the August 2005 issue of Entrepreneur. Subscribe »

As they try to find affordable health coverage for their employees, some business owners are falling victim to fraud. The U.S. General Accounting Office reports that the number of fake health insurance policies being sold to individuals and small businesses is on the rise. In response, the National Association of Insurance Commissioners has launched a nationwide awareness campaign called "Fight Fake Insurance: Stop. Call. Confirm."

"Before you sign a contract or write a check for any type of insurance or medical discount product, call your state insurance department and confirm that the company is legitimate and licensed to do business in your state," advises Sandy Praeger, insurance commissioner for Kansas, and NAIC's secretary-treasurer. Signs of fake health insurance include aggressive marketing and high-pressure sales tactics, premiums 15 percent or more under the average price for comparable insurance, and few coverage limitations. The rise in popularity of medical discount cards is also presenting scammers with more opportunities, so research these as you would insurance.

If you suspect you've bought a fake policy, immediately report it to your state insurance department. They can begin action against the entity that sold it to you, try to recoup what you paid, and direct you to a legitimate source for coverage.


Jacquelyn Lynn is a freelance business writer in Orlando, Florida.

Edition: June 2017

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