8 Common Life Insurance Scams and How to Avoid Them

unknown phone call suggestive of life insurance scam

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Life insurance is meant to provide financial security for your family in case you pass away, but falling for a life insurance scam can have the opposite effect. So how can you protect yourself? Here's how to spot the most common life insurance scams.

What Are the Most Common Types of Life Insurance Scams?

Knowing what to watch for can help you stay protected. Life insurance scams generally take one of these forms:

Phony Contacts

  • What it means: Fraudsters may contact you by email, phone or text message using a false identity to request money or personal information. They may say there's a problem with your existing life insurance policy and ask for your Social Security number or a payment to keep the policy in force.
  • How to avoid the scam: Don't click on suspicious links or attachments in a text or email. Review any communications carefully for misspellings or odd email addresses that could be signs of a scam. If you get a call from someone claiming to represent the insurance company you have a policy with, hang up and contact the company yourself. Never give out personal or financial information to unsolicited contacts.

Beneficiary Scam

  • What it means: Scammers may say you were named as the beneficiary on the life insurance policy of someone who has recently passed, but that an outstanding premium balance is preventing them from issuing payment. Watch out for this scam if you've recently lost a loved one. Thieves often comb obituaries to find potential victims.
  • How to avoid the scam: Don't give out any personal information or make a payment. Check with your state insurance department; if the insurance company is legitimate, contact them directly using the information on their website. If possible, go through any paperwork your loved one left behind to check for life insurance policy information.

Premium Diversion

  • What it means: Insurance agents pocket your premium payments instead of paying the insurance company.
  • How to avoid the scam: Be wary if an insurance agent asks for payment to their name personally, payment sent to a P.O. Box, or payment by wire transfer, gift card, prepaid card or money order.

Phony Policies

  • What it means: Fraudsters sell phony insurance policies without a license and keep the premiums.
  • How to avoid the scam: Before purchasing insurance, check with your state insurance department to make sure the company and agent are licensed.

Fee Churning

  • What it means: Shady insurance agents use cash bonuses to encourage you to use the cash value of your permanent life insurance to buy more insurance or switch policies. They'll earn a commission on the transaction, but the new coverage may be no better than your old coverage, and is often more expensive or restrictive.
  • How to avoid the scam: Don't change your permanent life insurance policy without fully understanding costs, restrictions and benefits. Ask if the insurance agent receives a commission from the product.


  • What it means: Insurance agents may forge your signature to get into your account and change the beneficiary or access other linked accounts.
  • How to avoid the scam: Work only with licensed insurance agents. Review your policy details annually to make sure no changes have been made without your consent.

Policy Switching

  • What it means: Insurance scammers lure you in with offers to reduce your premiums, then switch you to a policy with lower coverage. They may even switch your permanent life insurance policy to a cheaper term policy.
  • How to avoid the scam: Never agree to a change in your policy without getting the details in writing. Before making major changes to your retirement plan, you might want to enlist expert help from an attorney or financial planner.


  • What it means: Agents sell you insurance add-ons you don't want, such as an accidental death benefit (sometimes called double indemnity), which increases the insurance payout if you die due to an accident. Such policies may not be worth the cost due to their many restrictions and limitations.
  • How to avoid the scam: A licensed, trusted insurance agent can help you decide how much insurance you need, and accurately assess likely risks. Before buying any policy, understand its limitations and exclusions.

How to Avoid a Life Insurance Scam

Being proactive, not reactive, is the best way to protect yourself from scams. Follow these tips:

  • Ignore unsolicited calls, emails, texts or letters from life insurance companies or agents. Never click on a link in an unsolicited email or text.
  • Watch out for anyone who asks for sensitive personal information, such as your Social Security number or bank account number.
  • Be wary of offers that seem too good to be true, like a surprise insurance payout or a chance to cut your life insurance premiums in half.
  • Never pay premiums using gift cards, wire transfers, prepaid cards or money transfer apps. Pay by credit card or check.
  • Be careful of insurance agents who use hard-sell tactics or pressure you to make decisions quickly. Don't purchase insurance without getting the policy details in writing.
  • Be suspicious if someone offers premiums significantly lower than those for comparable coverage elsewhere.
  • Sign up for communications from your life insurance company and monitor them carefully, watching for any suspicious changes.

What to Do if You're the Victim of a Life Insurance Scam

If you're the victim of a life insurance scam, you can help catch scammers and protect others by reporting the fraud. Gather as much information as possible, including emails, texts, voicemails, phone numbers and letters, details of the fraud, how much money you lost, and anything else that might help.

You can also report a successful or attempted life insurance scam to:

If you've already paid the scammer, you might get your money back by acting quickly. Contact the financial institution that manages the payment method you used and tell them the transaction was fraudulent. Depending on their policies, they may reverse the payment.

To stem the damage from potential identity theft, check your credit report for suspicious activity such as new accounts you don't recognize. For a complete picture of your credit, you can get a free copy of your credit report from each of the three credit bureaus (Experian, TransUnion and Equifax) at AnnualCreditReport.com. Placing a fraud alert on your credit report can also help protect you from credit fraud. Change the passwords for all your online accounts and consider adding two-factor authentication to important accounts.

If your identity has been stolen, report it at the Federal Trade Commission's identity theft reporting website. Then contact your bank or credit union, creditors and other financial service providers to tell them what happened. You may also want to get law enforcement involved.

The Bottom Line

Life insurance scams can put your finances—and even your identity—at risk. Fortunately, common sense can go a long way to protect you. Free credit monitoring from Experian can also help alert you to possible identity theft before it negatively impacts your credit. For added peace of mind, consider signing up for Experian IdentityWorksSM, an identity theft monitoring service that includes insurance to help you recover the costs of identity theft.