Almost everyone is familiar with insurance fraud. We’ve all heard the stories of people who received millions after a car accident or the heartless insurance firm refusing to pay out to a widow on a technicality. Insurance fraud is one of the oldest types of fraud ever recorded, dating back to 300 B.C., when a Greek merchant sunk his own ship, in an attempt to cash in on the insurance, and drowned in the attempt. (For related reading, see The Pioneers Of Financial Fraud.)
TUTORIAL: Introduction To Insurance
Whether you are a policyholder or a shareholder in an insurance company, insurance fraud affects you. The field of insurance is wide and fraud exists in every area. Therefore, in this article we are going to focus in on one of the most important types of insurance – life insurance. We will look at the major types of life insurance fraud and how they affect your bottom line.
It Takes Two to Tango
Insurance fraud comes in two main categories: seller fraud and buyer fraud. Seller fraud occurs when the seller of a policy hijacks the usual process, in a way that maximizes his or her profit. Buyer fraud occurs when the buyer bends the process to obtain more coverage, or claim more cash, than he or she is rightly entitled to. (For related reading on insurance, see The History Of Insurance In America.)
Types of Seller Fraud
There are many variations of seller fraud, but they all center around four basic types. These are:
- Ghost Companies: In the ghost company scenario, policies are issued and premiums accepted from policyholders, but the company underwriting the policy isn’t legitimate and often doesn’t exist. These outright frauds are a type of boiler room operation, where a team of high-pressure scam artists dial likely victims to sell them false policies. Unfortunately, the fraud isn’t usually discovered until someone tries to file a claim on the policy their family member thought was in effect, in the event of his or her death.
- Premium Theft: The premium theft scenario is when the insurance rep accepts premiums, but doesn’t submit them to the company underwriting the policy, thus invalidating the policy. In this case, the agent essentially pockets the money. Premium theft has become less of an issue as more companies have moved towards direct deposit models, but it is still possible in some cases.
- Churning: Churning refers to a situation where the insurance rep advises the customer to cancel, renew and open new policies in a way that is beneficial to him or her, instead of beneficial to the client. This type of insurance fraud often targets seniors and is driven by the agent’s desire for larger commissions. Churning keeps a portfolio constantly in flux, with the primary purpose of lining the advisor’s pockets. (For more, see Paying Your Investment Advisor- Fees Or Commissions?)
- Over or Under Coverage: Similar to churning, under or over coverage occurs when an insurance rep convinces customers to buy coverage they don’t need, or sells a lesser policy and represents it as a complete policy. In either case, the rep is trying to maximize commissions and ensure the sale, rather than focusing on meeting the client’s needs.
Types of Buyer Fraud
Buyer fraud also comes in a number of different flavors, but they all center around a theme of dishonesty. Basic types of buyer fraud include:
- Post-Dated Life Insurance: Post-dated life insurance refers to a policy that has been arranged after the death of the person being insured, but appears to have been issued before death. This type of fraud is usually carried out with the help of an insurance agent. It is also one of the easier types of fraud for insurance companies to detect, because record keeping has become more stringent.
- False Medical History: Falsifying medical history is one of the most common types of insurance fraud. By omitting details such as a smoking habit or a pre-existing condition, the buyer hopes to get the insurance policy for cheaper than he or she would have otherwise been able.
- Murder for Proceeds: There are two versions of the murder for proceeds fraud. In the first, the insured doesn’t know they are insured and are understandably surprised to be murdered. In the second, the policy is legitimate and was taken out in better times, however, financial hardships lead the perpetrator to decide that killing his or her spouse/family member/business partner, for the money, is the best way out of the problem. (For related reading, see Mortgage Fraud: Understanding And Avoiding It.)
- Lack of Insurable Interest: As with murder for proceeds, insuring people you shouldn’t be insuring, in hopes that they will die, constitutes fraud. Insurance is founded on the idea of protecting people from financial loss, so using it to gamble on lives for a financial gain is a perversion of the system. This includes viatical settlements, which combine non-insurable interest with falsified policies taken out on the terminally ill.
- Suicidal Accidents: Just as financial hardship can lead otherwise rational people towards murder, the same factors can lead people to commit suicide in a way so it looks accidental. This constitutes fraud in that it is an intentional act for the purpose of collecting the insurance proceeds, and would not have occurred if those proceeds did not exist. This can be a very difficult one to detect, as the medical examiner has final say in accidental death. Even if it is clearly a suicide, the claim centers on the state of mind, rational or not, at the time of suicide.
- Faking Death or Disability: Many life insurance policies have riders for disability, creating the temptation to fake one to get the payout. However, some people take it a step further and fake their own deaths. In both cases, the fraudster has to deal with the possibility of being discovered through an investigation.
The Cost of Insurance Fraud
Just as there are two main types of life insurance fraud, there are also two consequences. When people engage in buyer fraud, it raises the cost of insurance. The reason for this is very simple; insurance companies are really good at modeling, so they tweak their models to account for buyer fraud and then spread that cost across all their policyholders. In a very real way, every person who tries to stick it to the insurance company, ultimately makes your policy cost more.
In contrast, seller fraud can potentially hurt just the select few that experience it. It is, in every essence of the word, bad luck. However, on the whole, every time the insurance company you invest in treats someone badly, it loses business to a company with a better reputation and controls on the agents. As an investor, you will be tempted to move your capital to the better performing company, thus punishing seller fraud in a roundabout way. The internet has also helped reduce seller fraud, as many shady outfits and practices become exposed sooner in the game.
The Bottom Line
Insurance is a business that is built on risk analysis and probabilities. Every instance of insurance fraud puts pressure on the business, whether seller or buyer fraud. For this reason, many companies build generous contingency funds to protect them against fraud, as well as other unforeseen events. While this is good from the investor’s perspective, it does unfortunately lead to your personal life insurance premiums being higher than they otherwise would have been, in a more honest world. (For related reading, see What To Do If Your Insurance Won’t Pay.)
Seek a source of information that is reliable, and give the misinformation and gimmicks a wide berth. Use this article as a source for good advice that is not only current, but helpfully accurate as well.
Get your down line to participate and communicate. Are they shy? Is there an unresolved issue? Make sure your network feels free to contact you directly for advice and perspective. It is also important that they maintain good communication within the group as a whole to keep enthusiasm high. A team where everyone participates is usually the best, and you want your team to be the best.
Keep your expectations low in the beginning. Many people become discouraged after a short time. The introductory stage of your business operations is one of the most critical periods. Even when things start out slowly, the momentum of your business will pick up for the long term as you execute your network marketing program.
Building a website is a great idea for network marketing, but even using social networking sites is a start. Even a good blog can generate enough interest. In addition, make sure you are taking full advantage of the exposure you can get from the various social media options to enhance your network. If you have a presence on the internet you will expand your network. Keep in mind that an active and well designed blog helps too.
Get your network contacts to engage and take over the conversation. It is easier for you to promote your product, if you take the time to get to know your networking contacts. You know their needs, wants, fears and dreams, so you can direct your market to them.
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In recent years, there has been a great deal of discussion and information concerning Google’s Adsense program at :
There have been truckloads of eBooks and articles written on the topic.
But in the grand scheme of things, it is a profitable program that still gets overlooked by many who are just coming online to start a business, as well as those who have been around a while.
First, let’s take a look at exactly what Adsense is and what it is all about:
“Adsense is a program for webmasters which was implemented by the famous Google some years ago.”
Google then starts serving ads to those websites, based on the keywords that it finds in the text of the page. When a visitor clicks on one of those ads, the webmaster makes money – usually a few cents per click.
However, when a site has a great deal of traffic, and when the webmaster knows which keywords are the most profitable to target, there is a lot of money to be made.
It sounds simple enough, but it’s really NOT that easy. First of all, you have to be approved – and Google is picky these days. The good news is that once one site is approved, and you have a Google Adsense account, there is no need to seek Google’s approval to use Adsense on any other site that you own, as long as that site is within the Google’s terms of service guidelines.
Once you are approved, you have to know which keywords to target – the ones that will make you the most amount of money per click, and how to write (or have written for you) content that makes those high paying ads appear on your site.
Finally, you have to learn how to drive traffic to your Adsense site. Without the traffic, you won’t get any clicks, and without clicks, you won’t be making any money.
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Preparing Your E-book for HTML
Format the book in HTML. This can be done by opening the text in Microsoft Word and saving it as HTML. It can also be done in an HTML editor or a plain text editor like Notepad. If you have a blog like WordPress, HTML formatting is not needed. You can simply paste the text into a blog page and the formatting is done automatically.
Divide the book into pages. These can be of any length. You can make each page the standard 250 words, or make each chapter one page. This is important because you can only use a maximum of three AdSense ads per page. If the entire book was on a single HTML page, this would drastically limit your revenue potential.
Upload the pages to your website as you normally would. You can use free FTP clients like FileZilla, Coffee Cup or Core FTP with most Web host providers. If you have Web software like WordPress or Joomla installed on your website, you can use their page templates.
Create an index page with links to the first page of each chapter. Include links from each page to the page before and after it using arrows or “Back” and “Next” at the bottom of each page.
Proofread each page to ensure none of the content violates Google AdSense policy, such as content on violence or gambling.
Inserting AdSense Code
Log into Google AdSense. Click the “My Ads” tab, then the “New Ad Unit” button.
Type a name for the ad unit in the required field, such as “ebook.”
Follow the onscreen instructions to select an ad size and style as desired for your e-book pages. Copy the ad by highlighting it and pressing “Ctrl-C” on the keyboard.
Navigate to your Web page editor. Most Web service providers offer a free page editor with their services if you do not have your own program like WordPress or Joomla.
Paste the code where you want it to appear on each page up to a maximum of three times. Save the page and view it in your Web browser before continuing to add pages.
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The Foreign Exchange Market — better known as Forex — is a world wide market for buying and selling currencies.
It handles a huge volume of transactions 24 hours a day, 5 days a week. Daily exchanges are worth approximately $1.5 trillion (US dollars). In comparison, the United States Treasury Bond market averages $300 billion a day and American stock markets exchange about $100 billion a day.
The Foreign Exchange Market was established in 1971 with the abolishment of fixed currency exchanges. Currencies became valued at ‘floating’ rates determined by supply and demand. The Forex grew steadily throughout the 1970’s, but with the technological advances of the 80’s Forex grew from trading levels of $70 billion a day to the current level of $1.5 trillion.
The Forex is made up of about 5000 trading institutions such as international banks, central government banks (such as the US Federal Reserve), and commercial companies and brokers for all types of foreign currency exchange.
There is no centralized location of Forex — major trading centers are located in New York, Tokyo, London, Hong Kong, Singapore, Paris, and Frankfurt, and all trading is by telephone or over the Internet. Businesses use the market to buy and sell products in other countries, but most of the activity on the Forex is from currency traders who use it to generate profits from small movements in the market.
Even though there are many huge players in Forex, it is accessible to the small investor thanks to recent changes in the regulations. Previously, there was a minimum transaction size and traders were required to meet strict financial requirements. With the advent of Internet trading, regulations have been changed to allow large interbank units to be broken down into smaller lots.
Each lot is worth about $100,000 and is accessible to the individual investor through ‘leverage’ — loans extended for trading. Typically, lots can be controlled with a leverage of 100:1 meaning that US$1,000 will allow you to control a $100,000 currency exchange.
There are many advantages to trading in Forex, including:
— Liquidity: Because of the size of the Foreign Exchange Market, investments are extremely liquid. International banks are continuously providing bid and ask offers and the high number of transactions each day means there is always a buyer or a seller for any currency.
— Accessibility: The market is open 24 hours a day, 5 days a week. The market opens Monday morning Australian time and closes Friday afternoon New York time. Trades can be done on the Internet from your home or office.
— Open Market: Currency fluctuations are usually caused by changes in national economies. News about these changes is accessible to everyone at the same time — there can be no ‘insider trading’ in Forex.
— No commission Fees: Brokers earn money by setting a ‘spread’ — the difference between what a currency can be bought at and what it can be sold at.
How does the foreign currency exchange market work?
Currencies are always traded in pairs — the US dollar against the Japanese yen, or the English pound against the euro. Every transaction involves selling one currency and buying another, so if an investor believes the euro will gain against the dollar, he will sell dollars and buy euros.
The potential for profit exists because there is always movement between currencies. Even small changes can result in substantial profits because of the large amount of money involved in each transaction.
At the same time, it can be a relatively safe market for the individual investor. There are safeguards built in to protect both the broker and the investor and a number of software tools exist to minimize loss.
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