Is life insurance a scam? and the best tips in the US

Is life insurance a scam? and the best tips in the US Life Insurance: A Legitimate Financial Product Designed to Protect Your Financial Security

Life insurance is a lawful financial product designed to safeguard the financial well-being of policyholders against risks related to longevity and life. Insurance companies offering this product operate under strict supervision by government agencies such as the Ministry of Finance and must comply with rigorous legal regulations. However, like any industry, there may be unreliable individuals or organizations. Therefore, it is crucial to choose reputable insurance companies and carefully read the contract terms before participating.

1. Why Do Many People Think Life Insurance Is a Scam?
Is life insurance a scam? and the best tips in the US

Life insurance has become a common financial tool today, yet many individuals remain skeptical about its transparency, believing it to be a scam. This skepticism often arises from the following reasons:

1.1 Impersonation of Life Insurance Agents

With the rapid growth of the insurance industry, some individuals exploit public trust by impersonating insurance agents to fraudulently take customers' money and then disappear. This indirectly causes fear and hesitation when people mention insurance.

Therefore, whenever intending to buy life insurance, customers should contact the insurance company directly for detailed consultation.

Manulife Hotline: 1900 1776
Or leave your contact information below this article to receive assistance from our consultants.

1.2 Lack of Understanding of Contract Terms

Misunderstanding contract terms greatly impacts the insurance benefits customers receive. Thus, customers need to thoroughly understand the following:

1.2.1 Providing Accurate Information When Signing the Contract

Article 21 of the Insurance Business Law 2022 clearly stipulates that the policyholder must fully and honestly disclose all relevant information required by the insurance company.

All personal data and health information must be declared transparently and accurately.

If the policyholder intentionally provides incomplete or false information to conclude the insurance contract, the legal consequences under Clause 2, Article 22 of the Insurance Business Law 2022 include:

• The insurance company has the right to cancel the insurance contract;

• The insurance company is not obligated to pay the insurance benefits and must refund the premiums after deducting reasonable expenses as agreed in the contract;

• The policyholder must compensate for any damages incurred by the insurance company (if any).

In reality, many cases of inaccurate information disclosure have led to insurance companies refusing benefit payments, causing misconceptions about insurers. Therefore, it is essential to provide accurate and clear information to ensure the contract's legal validity and your insurance rights.

1.2.2 Early Termination of the Contract

Terminating the contract early affects financial plans and insurance benefits compared to initial expectations, specifically:

• Loss of insurance benefits: Early termination means all insurance benefits cease, leaving you unprotected against risks.

• Reduced surrender value: Early termination, especially in the initial years, often involves penalties or handling fees, resulting in receiving less than total premiums paid.

• Loss of long-term advantages: Cancelling the contract forfeits the long-term benefits of accumulation and investment for the future.

Life insurance is a long-term financial plan; therefore, before deciding to participate, consider your financial situation and protection needs carefully to choose the most suitable product.

2. What Is Life Insurance?

2. Life Insurance Is Not a Scam

Life insurance is not a scam for the following reasons:

2.1 A Long History of Development

Since the 1990s, when Vietnam opened its market and integrated economically with the world, Manulife became one of the first foreign insurance corporations to enter the Vietnamese market. By 2024, Manulife Vietnam serves nearly 1.5 million customers with 50 offices nationwide, contributing to integrating Vietnam’s life insurance market with regional and global markets.

2.2 Legal Perspective
Is life insurance a scam? and the best tips in the US

Vietnamese and international laws recognize and facilitate insurance business operations.

In Vietnam, the Insurance Business Law No. 08/2022/QH15 regulates the organization and business activities of insurance companies, as well as the rights and obligations of all parties involved. Some key provisions include:

• Clause 13, Article 4: Life insurance is defined as insurance for the case where the insured person lives or dies.

• Article 34: Defines the insurable interests under life insurance contracts, including:

  • The policyholder themselves;

  • The policyholder’s spouse, parents, children;

  • Siblings or others in a care relationship with the policyholder;

  • Persons with a financial interest or employment relationship with the policyholder;

  • Persons who give written consent for the policyholder to purchase health insurance on their behalf.

In simple terms, the law allows the policyholder to buy life insurance for themselves or closely related individuals. This clearly confirms that life insurance is not a form of fraud, as insurance business is strictly regulated by law. However, purchasers must select reputable insurers and understand contract terms to avoid unnecessary losses.

2.3 Insurance Claims Payments

Every year, the insurance industry pays out tens of thousands of billions of VND in compensation and benefits to individuals and businesses facing risks, contributing to national budget stability.

According to preliminary statistics from the Vietnam Insurance Association, as of December 12, 2022, total insurance claims payments were estimated at VND 64,018 billion, an increase of 23.29% compared to 2021, with life insurers paying approximately VND 40,600 billion.

Specifically, Manulife Vietnam paid VND 1,850 billion in claims and benefits in the first quarter of 2024, up from over VND 1,700 billion in the same period of 2023. These impressive figures demonstrate the vital role of life insurance in people’s lives.

3. If It’s Not a Scam, Why Does Life Insurance Sometimes Not Pay Claims?

There have been many cases where life insurance did not pay claims despite full premium payments. Let’s explore why:

3.1 Insured Events Outside Coverage Scope

Life insurance protects against specific risks outlined in the contract. If an insured event is not covered, the insurer cannot pay benefits.

Therefore, before signing, you should carefully understand your benefits and the procedures when an insured event occurs to avoid misunderstandings.

3.2 Exclusion Clauses

Exclusion clauses in life insurance define situations where the insurer is not liable for claims.

According to Article 40 of the Insurance Business Law 2022, the insurer is not obligated to pay benefits in cases such as:

• Death by suicide within two years from the first premium payment or contract reinstatement;

• Death caused intentionally by the policyholder or beneficiary;

• Permanent disability caused intentionally by the insured or policyholder;

• Death by execution of a death sentence;

• Other cases agreed upon in the contract.

These clauses may vary by product and insurer. Hence, it is crucial for policyholders to read the terms carefully to understand specific exclusions.

These exclusions ensure fairness, integrity, and prevent insurance fraud, balancing rights between policyholders and insurers.
Is life insurance a scam? and the best tips in the US

4. How to Buy Life Insurance to Avoid Scams

The following tips will help you avoid fraudulent life insurance schemes:

4.1 Choose Reputable Insurance Companies

A reputable insurer not only meets your protection needs but also saves time and money while ensuring your rights when claims arise.

Manulife has been present in Vietnam since 1999, with the mission to help customers “Make decisions easily, live fully.” Manulife is proud to be the first foreign-invested life insurance company in Vietnam. By the end of 2024, total assets grew 15.5% to VND 137,049 billion, maintaining the leading capital scale in the life insurance market with charter capital of VND 22,220 billion.

In 2024, Manulife Vietnam paid out VND 7,884 billion in claims and benefits—an impressive figure among competitors, partly due to Manulife’s strong health insurance segment.

These numbers testify to Manulife’s trustworthiness in the Vietnamese insurance market.

4.2 Provide Honest and Accurate Information

The Insurance Business Law 2022 states that if a policyholder intentionally provides incomplete or false information to obtain benefits, the insurer may cancel the contract.

Thus, honest and accurate disclosure, especially regarding health, helps avoid complications later.

It is best to buy life insurance while young and healthy to ensure optimal protection and cost-efficiency.

Moreover, policyholders should personally fill out all forms instead of letting agents do so, to maintain control over their information and avoid future problems.

4.3 Verify Insurance Agent Information

Many fraud cases involve impersonators posing as insurance agents, causing financial loss and interruption in coverage.

To avoid this, contact the insurance company directly to verify agent information.

For Manulife, call hotline 1900 1776
Or leave your contact details here for assistance.

5. Important Tips to Avoid Falling into Insurance Fraud Traps

Here are some key notes to help policyholders avoid insurance scams:

• Verify insurance company information: Check phone numbers, addresses, and customer service info, then compare them with the official website. If discrepancies exist, reconsider your decision.

• Check contract information: Inconsistent or poorly structured contract details may indicate fraud. For example, an investment contract from one company but including terms from a reputable insurer.

• Investment products: Lack of clear, transparent investment product details in documents or on the insurer’s website.

• Unusually high interest rates: Contracts promising rates far above bank savings without clear, convincing explanations should raise suspicion.