Deceptive Sales Practices in the Life Insurance Industry
Deceptive sales practices are common in the insurance industry. The Federal Trade Commission (FTC) has ruled on various acts of deception, including misleading price claims, comparative misrepresentation and false savings claims. These practices have caused widespread damage to the industry’s reputation. In some cases, consumers are left paying the price for fraudulent insurance policies, resulting in unpaid claims.
The Federal Trade Commission also has rules in place to protect consumers from deceptive marketing and advertising. For example, the FTC requires advertisers to document their quantitative claims. There are also guidelines regarding ad placement, such as the use of text and pictures, which should be accompanied by a description of the claims. Additionally, the FTC imposes strict limits on advertising. One of the best ways to avoid being ripped off by a fraudulent insurance policy is to make sure you receive a copy of your policy within thirty to sixty days of your purchase. If you do not receive a copy, contact your insurance company.
Another way to avoid being ripped off is to shop around. Insurance companies and their agents can use high pressure sales tactics to lure customers. Some of these tactics are illegal, but you may not even know about them unless you do some research. Before you buy, check with your insurance agent to make sure he or she is licensed and has a clean track record. You should also ask about any complaints against the company or its representatives.
Other deceptive sales tactics involve the use of fake testimonials. Many products are marketed with testimonials from celebrities. This is especially true of personal pension plans, which often contain a strong investment component that makes the policy highly speculative. Despite this, you should only purchase an insurance policy if you are certain it will be there when you need it.
The FTC has also ruled on a number of other deceptive practices, including the use of the word “free” without proof, misleading price claims, and comparative misrepresentation. Of course, these types of practices have been around for a long time. However, recent developments in the industry have caused the FTC to tighten its no-no list.
In the life insurance industry, deceptive sales practices have been a big concern for a while now. Some of the most popular tactics involve using “bait and switch” sales pitches, where a retailer entices a potential customer with an alluring offer, only to disparage it later. When this happens, the customer is left with an expensive product and a hard-to-break contract.
The FTC has taken the lead on this matter by creating guides for state courts to use in hearing claims of deceptive pricing advertisements. These guides set the standards by which the commission will judge the merits of price claims. Typically, a comparison ad must be for the same product. It must also mention the former price.
Although these measures are not foolproof, they can help you ward off deceptive sales.
