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BLOG 04/01/2022

5 Common life insurance scams

Life insurance is designed to provide financial protection for your loved ones if something unexpected happens to you. But sometimes, scammers step in and try to lure you into making a false purchase or providing sensitive information. That’s why working with top-rated insurance companies and dedicated agents to find the right policy can be critical. And while we can’t stop scammers completely, we can help you understand the most common life insurance scams and how to protect yourself.

1. Beneficiary scam

Picture this: you’ve just lost someone close to you. You’re overwhelmed by grief, and before the tears have dried, you have an email telling you that you’re the beneficiary of a very large life insurance policy left by your loved one. Yet before you can receive the payment, you first need to pay the outstanding premium balance to get it up to date.

No, you haven’t received a sudden windfall. Unfortunately, you’ve been the target of a horrible life insurance fraud called a beneficiary scam. An unknown scammer is trying to solicit a payment out of you for a life insurance policy that doesn’t exist.

How to protect yourself: If you receive an email or call from someone claiming to be with a life insurance company, go to the company’s website and look up contact information directly. Speak with an agent you can confirm is affiliated with the life insurance company to get accurate information. And never give financial information over the phone or via email to someone you don’t know.

2. Fraudulent life insurance websites

If you’re searching for a new life insurance policy, a quick google will tell you that there are hundreds of companies ready to help you. Unfortunately, some of the companies that claim to sell life insurance won’t actually connect you with an affordable life insurance policy. Instead, they’re looking to have you sign up for a service so they can collect your personal and financial details.

How to protect yourself: Always think twice before you give out any personal information online, and protect yourself further by checking:

  • The Better Business Bureau to help confirm a business’s legitimacy.
  • Your State Insurance Department.
  • The website to determine a secure connection before providing personal or payment information. A website URL that begins with HTTPS rather than HTTP uses SSL encryption to transmit information securely.

3. Problems with your existing policy

Spam email has become commonplace in recent years. And life insurance companies are not immune. Say you open your inbox one day to find an email claiming to be from your life insurance company. And they’re saying there’s a sudden issue with your policy. No need to worry, you can make a payment immediately, and everything will be fine. What feels strange though is you know you just paid the premium on the first of the month. Smells phish-y, huh?

Several key signs can tell you an email may not be legitimate:

  • The sender’s address is similar to other emails from your life insurance company, but it’s not exact. For example, you may have received an email in the past from agent@bestlifeinsurancecompany.com, but the one you just received is from agent@thebestlifeinsurancecompany.com. Small details matter!
  • There are misspellings of common words and/or the graphics of the email look odd or blurred.
  • The link included in the email is shortened so that it doesn’t show the full website URL. Instead of opening the link right away, hover over it first before clicking to view the full address.

How to protect yourself: If you receive an email claiming to be your life insurance company, navigate to their website directly and talk to an agent using that contact information, not the information in the email. And never give your Social Security Number, credit card number, or other financial information to an unverified person.

4. Fake life insurance agent phone scam

If you’re on the hunt for a new life insurance policy, you may receive phone calls from agents looking to connect you with the right policy. And while sometimes these solicitations are from reputable insurers, calling about a lead for a policy can also be a tactic for scammers.

How to protect yourself: If someone calls from a life insurance company, ask them to verify their affiliation and research the company online. Agents should also be able to provide a license number, known as a National Producer Number (NPN). Once provided, you can look up the NPN to verify it’s legitimate.

5. Policy changes without your consent

Let’s say you find a great term life insurance policy with a company you think is legitimate. Then, next month, you notice your premium payment was more than twice what you should be paying.

What gives? While it could be an honest mistake, you could have also fallen victim to another life insurance scam where a dishonest agent switched you to a higher value policy without notice.

How to protect yourself: Keep your policy documents handy and be sure you have online access to your policy and payment history if possible. If you see any changes out of the ordinary, contact your life insurance company immediately.

Avoiding life insurance scams

The best way to avoid life insurance fraud is to stay vigilant as you look for a new life insurance policy or maintain an existing one. Doing research in advance and taking steps to protect yourself can prevent you from becoming a victim in the first place. If you’re ready to find a life insurance policy with a reputable company, eFinancial is here to help.