Life Insurance Scams

Unfortunately, there ARE life insurance scams. They are somewhat common (If you know what to look for), whereupon agents are up to no good. They are the bad apples in the industry. This article is about the bad apples in the industry and how to protect yourself.


Contents Quick Guide:



Insurance Agency (and agent) Dishonesty

Life insurance is extremely important. When it comes to getting a life insurance policy, there are absolutely “Dos” and “Don’ts”. A great starting point, is to focus on choosing a solid agency. Your agency is like your team captain. The agency, assuming they are trustworthy, will assign your insurance rep (Your agent) and make recommendations to you, as well as keep you abreast of changes that may benefit or otherwise impact you. They can also make some changes to your policy, with your permission. And, of course, choose and submit your initial policy. Please bear in mind, regarding the following scams, your best protection is choosing a reputable, established agency that is easy to reach when needed.

The agent/agency scam you need to watch out for (and this is not new), is simply saying whatever needs to be said, to get in your doorway. In an effort to offer the highest level of service to our clients, we keep record and review all feedback from clients, including stories of what they have experienced with other agents.

Many agencies train their agents to be intentionally deceptive, to get access to your kitchen table- because this is where trust is most easily established. Agents, on the phone, will create a guise of authority and legitimacy, using the name of your lender, your street address or phone number- anything they can share with you, to create a shred of trust. Ironically, in this process, over 90% of the time, there is dishonesty involved, somewhere. These agents and agency directors know that if they can get to your kitchen table and have tea, water or coffee with you, they are 79% more likely to “close the deal”, which is 100% their goal. Helping you is irrelevant to this type of financial predator.

Common Life Insurance Scams To Watch For

Here are just a few current life insurance scams, to wrap your head around.

  • Using different life insurance terms to express urgency
  • “Representing the lender”
  • Taking over another agent’s cases


Remember that agents want to get in the door and sit with you under any circumstances. So, unfortunately we’re seeing people that are being incredibly dishonest to accomplish this. They want to shake your hand and then try and warm you up, which is an industry term.

Using different life insurance terms…

1 of many examples in this category, is when agents try to get you out of 1 life insurance policy, and into another identical or nearly idental policy, but call it something different. Specifically, if you have a whole life structured policy and an agent efforts to get you out of your “outdated” or “poorly structured” policy, and into a “Burial Insurance” or “Final Expense” policy, so that your end of life expenses are properly covered. Well… Whole life = Final expense = burial insurance. So- they are not being honest with you, unfortunately.

Representing the lender…

If you are interested in a term life insurance policy called “Mortgage Protection“, a life insurance agent may pretend to represent the lender. They Do NOT represent the lender. They are blatantly lying, to curry trust with you. To clarify- lenders and mortgage brokers do not offer Mortgage Protection. However, they can offer PMI, which is Private Mortgage Insurance- which does NOT benefit YOU. It only benefits the lender. Mortgage protection is life insurance, sold by a life insurance agency and underwritten by a life insurance company, that only benefits YOU. The life insurance agent on the phone, should tell you they are a life insurance agent, and offer mortgage protection- they do NOT represent the lender. They should only reach out to you, if you asked for mortgage protection information. They should never cold call you.

Taking over another agent’s cases…

On many occasions our clients have called us, wondering why another agent called them, saying they are supposedly taking over all our cases. The other agents tell them this is occuring for different reasons:

  1. I’m supposedly not doing a good enough job
  2. I’m getting out of the business
  3. I did something illegal or otherwise nefarious/evil

And… thank goodness they are here to meet with our client and change their policy to something that is a better fit. This scam is very common, and we run up against it several times per month- so we warn our clients, so they can expect the shady phonecall. The idea, is, they plant a seed of doubt and concern, so they can get invited in the door, meet with the client and cancel their policy, to put them into something else that is supposedly better. Once they arrive, under the guise of protecting the client from the big bad agent, it is easy to convince them that they need to change policies. Ironically, the new and improved agent knows nothing about the policy the client has, which insurance company it’s underwritten with, or which agency or agent wrote the policy. It is all a cold call. It’s really disgusting that agents are doing this, and some agencies are training this- to make an extra buck.

Good news- you CAN protect yourself. It all starts with choosing an agency/agent that is worthy of your trust.

Indicators Of A “Shady” Agent/Agency:

  • No state approved badge (They should wear a badge, not a name plate. It should have their headshot and something that shows the state has approved them for business)
  • No readily available state life insurance license number (This should, ideally, be on their badge. Write down their license number)
  • No business card- or only 1 contact number (They should be easy to reach. You should be able to reach their agency, as well; Not just them.)
  • No website, or unestablished website (The website should be impressive and show high activity)
  • No website resources- such as plentiful blogs, testimonials, etc. (Are they in the business to give or to take? The website should provide indicators that they offer resources to their clients because they care)
  • Cannot reach them, reliably, on the phone and/or via email. (Give them a call, and send an email. Do they respond?)
  • Cannot readily prove their access to high rated life insurance companies (They should not only be able to give you a list of their resources, but be able to show you their price running software, without delay. Also, you can easily check their life insurance companiesratings, via Google. You want A- or better.)
  • Lousy reviews with the BBB
  • Lousy reviews, Online




2 Simplified Ways To Better Protect Yourself and Your Family

1) If you are meeting an agent, face-to-face…

If they do not have a state approved badge with the life insurance number and the state logo, ask them to leave.

2) If everything is telephonic…

Spend time after the call, really checking out their company name and their website. If it is not impressive… “NEXT!”


By following these (above) 2 simple steps, 90% of problems are eliminated. Most agents prefer to stay off the radar, so they don’t have adequate website presence, and they don’t make their insurance number easily accessed. If you have to ask for it, it’s a red flag.

We take strides to be aware of what is going on in the industry. If you think you might have been victim of a life insurance scam, please call us and we’ll give you some guidance.

Stay safe out there.


This article was written by Chad McMahan, CEO of Protect With Insurance.


Schedule a free call with Chad here:



Protect With Insurance

989 S Main St Ste A-293

Cottonwood, AZ 86326

Chad McMahan

Chad McMahan

Spread the word