Common Life Insurance Scams You Easily Find Online

Life Insurance Scams

Like any product, life insurance can be risky to purchase online if you purchase it from the wrong people.  While it is impossible for you to purchase any state-regulated plan from a non-licensed agent, that license alone does not mean your well being will come first to them.

Fortunately, some (like Insurance for Final Expense) in this industry really don’t care about making any money at all from you or others until your needs are totally met.

We believe it is better to make less and have your happiness index higher.

Why? We want repeat business and to do what is right.  Most Americans have multiple insurance policies and have even more friends with insurance needs.  Rather than just try and capture one large account, it makes far more sense to take care of all of your needs.

In this article, we will expose some Life Insurance scams you easily find online. So, here we go:

The Policy Has Issues

Life insurance policy scams

You may sometimes get an email stating that your current policy has a problem. The email looks like it came from your insurer. In actuality, though, it is designed and sent by a scammer who makes it look real and official. It can state any problem with your policy, like your last premium wasn’t paid properly or the insurer canceled.  

Next, the email will ask you to share your personal information like password and social security number to retain your coverage. Beware of this whole life insurance scam as it is meant to rob you of your credit card information and money.

Declaring You the Beneficiary

In this scam, you may get an email declaring you a beneficiary for someone’s insurance policy. It will connect you to that person somehow, saying they named you as their beneficiary when that person had passed away.  

Here again, the scammers will ask for your personal information in reply to avail of the policy benefits. It is a red flag that you must avoid. 

Lead Companies Making You Think They Are Insurance Companies

Life insurance scams

There’s a huge difference between a person who wants to sell your information to a struggling agent and an insurance company that actually wants to serve your needs.

The problem is the line gets blurred.  You receive a piece in the mail pitching the idea of getting more coverage, but you are really not sure who it is from.  Are they reputable? 

Confused, maybe you toss the piece, or just maybe, you fill out the form for more information.

Thinking you are dealing directly with an insurance carrier, you are soon inundated with phone calls, texts, and emails from many agents.

You wish you never filled out that form.  You sour on the idea of insurance coverage at all. Not only this, but they will also ask for your contact number to give an instant online quote, which is again a scam. What they really do is sell this information to numerous insurance agents and put your name on a sales list. 

The TV Ad Bait and Switch

Whole life insurance scam

Insurance is very popular these days.  You can tell this by the sheer number of TV ads for all types of different policies.  Some of the rates are incredibly low.

The rates advertised on TV are ONLY for the healthiest of people.  Only 10% or less of Americans are really in that good shape where they could even qualify.

What more … the rates quoted are for policies that will RARELY pay out. These are nothing less than bogus life insurance plans.

For example, I recently saw an advert on CNN that boasted 10-year term plans for folks in the age range of 42 years old.  The pricing was “incredibly low”.

The problem is that while some folks do die in that age range, the vast majority don’t, especially if you are super healthy at age 42 to qualify for that package in the first place.

To use rough numbers, out of 500 people who qualify and can afford payments, maybe only 1 or 2 will pass away during those 10 years.

It’s almost like free money for the insurance carriers.  Not that there is anything wrong with selling these policies, but the reason they are advertised so heavily on TV is to suck you into making that phone call.

Policy Upselling

Life insurance investment scams

Usually, life insurance agents get a commission to sell policies. Hence, upselling or overselling isn’t something new as agents get higher incentives by selling higher-priced insurance. However, you may be paying more than required for your needs.  

Hence, you should be wary of agents who try to sell double indemnity rider to double your coverage amount if you die due to an accident. In reality, as you age, the chances of dying due to illness are much more than an accident.

You will pay extra money for all those years when you are trying to avoid accidental death. Another upselling technique is a waiver of rider, which promises coverage even if you are disabled suddenly. In all such life insurance scams, you will gamble your money on an unlikely circumstance while your agent takes home a higher commission. 

Crooked and Bogus Agents

Although the vast majority of insurers and agents are ethical and dependable, the industry has many scammers too. Fraudulent insurance agents can steal your money and keep it aside for their gains. They can quote a premium for a policy that was never approved. 

Unless you check up this policy, you will never know that you were falsely insured and paid premiums for all those years. You can avoid such life insurance scams by working with licensed and independent agents like us.

Churning or If an Agent Pushes You to Switch to a Less Valuable Policy

Once you sign up with an agent and provide all information to adjust or draft an insurance policy under your name, you lay your trust in them. The agents will know when you don’t regularly check your policy and pay your premiums on time.  

Sometimes, they may approach you with a better policy to replace the existing one. It can be from the same carrier or a new company. The policy should be more valuable for the same or reduced premium than the original one. 

But, when your agent misleads you to switch to a less valuable policy where benefits will go down, it is a fraudulent practice. An honest agent will give you the complete paperwork about the policy benefits and proceeds when you agree. 

If an agent approaches without documents or useful information, it should wave the red flags for you.

Identity Theft Scams

When an agent or insurer tries to steal your personal information through phone calls, emails, faxes, or letters, it is identity theft. The swindlers use your personal information to open new accounts and purchase any products. 

You will receive some communication from the scammer who claims to be working for an insurance company. They may claim that you have some problem with your policy or overdue payment that requires your account or credit card details. 

You may know it, but your identity is used to set up new credit cards and make huge purchases that may put a dent on your credit. Beware of such life insurance scams.

Frauds Committed by Customers

Bogus life insurance plans

When you hear about online life insurance scams, it is not only about the insurers and agents. Sometimes, customers also misrepresent the facts or twist the information to get a new policy or stake claims for an existing one. Some of these frauds are:

  • Application Fraud– When you provide false or misleading information in your application form, it is a material misrepresentation. But, remember that underwriters will review your application, personal profile, medical exam, and health reports to verify your information. It may result in rejection or higher charges by the insurer.
  • Claims Fraud– Sometimes, people go as far as faking an insured’s death to collect life insurance death benefits. Beneficiaries may also commit the grave crime of killing the insured to get the payout. Such frauds not only result in claim denials but also lead to prosecution.

What Happens Due to An Insurance Fraud?

Fake life insurance policy

When a customer commits fraud, it may result in rejection of the application or higher premiums. Most likely, if you lie in your application, you will not get a policy from any other carrier as well.

If you misrepresented your health history and it goes unnoticed by the underwriters, it can come back to haunt you later on. It happens if you die during the contestability period of 1-2 years when the insurer can revisit your medical records and application to verify your claims.  

If they discover your misrepresentation in this review, your policy can be canceled, and your family will remain unprotected.

How to Avoid Life Insurance Scams?

You can avoid a whole life insurance scam by being an aware and knowledgeable customer. Do not reply to any unsolicited emails asking for your personal information. 

Even if the email seems to be from your life insurer, call the company or your agent to verify the email’s purpose. If you get notified about a policy you never bought, check the details first and ask your agent before getting excited about the money.

When browsing the life insurance websites, look at the logos, and read the fine print about any health discount or other relevant information that can be a warning signal. 

Use the internet to research your insurance agent before agreeing or signing any document. Check your state’s Department of Insurance’s website to verify the agent’s information and license details. 

How to Find a Trustworthy Life Insurance Company?

Be realistic about what coverage should cost, but shop around with an insurance quoter (right hand of this page) to find the lowest rate for the most coverage.

And also understand this. There are many reputable companies online, like Colonial Penn, AARP, and John Hancock Life Insurance. The simple problem is, their rates are too high, and policy benefits too low.

This isn’t good.

When you deal directly with insuranceforfinalexpense.com, we shop around for many different carriers and bring you the absolute finest offers in the world of Final Expense Burial Insurance.

Fill the form to your right on this page and see exactly what we mean.

Expert FAQs

1. What is the Most Common Insurance Fraud?

Customers need to look out for churning frauds where agents convince them to upgrade to a better plan that asks for higher premiums. Another common life insurance scam occurs when agents pocket your premiums without actually buying a policy. You may think you are covered, but the agent pocketed the money leaving you without any coverage. So, if an agent asks for cash payments, do not trust them. 

2. How Do Insurance Scammers Identify Their Victims?

Both young and old are equally vulnerable to online life insurance scams. In many cases, the fraudsters contact a recently widowed woman telling her about a policy with huge benefits left by her deceased partner. They have to pay a premium shortfall to get the death benefits. This is a significant fraud thriving on vulnerable survivors. 

3. How Can Seniors Avoid Insurance Frauds?

Seniors are most at risk of insurance frauds by scammers who claim to help them recoup their lost market assets. You should work with a trusted independent agent to discuss insurance matters and buy the right products.

Gary P. Cubeta
(Serving Americans In All 50 States)