Life Insurance Scams

Unfortunately, there ARE life insurance scams. They are somewhat common IF you know what to look for. Some agents are up to no good. There are bad apples in every industry. Read more to learn about the bad apples in the industry and how to protect yourself.


Contents Quick Guide:



Insurance Agency and Agent Dishonesty

Purchasing life insurance is extremely important to your loved one’s future.

However, when it comes to getting a life insurance policy, there are absolute “Dos” and “Don’ts”. A great starting point is to focus on choosing a solid insurance agency. Your agency is like your team captain. The agency will assign you a personal insurance rep or agent. Your agent can 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.

Saying Whatever They Need

One of the obvious insurance scams you need to watch out for (and this is not new), is an agent who says whatever needs to be said in order to get their foot in the door.

In an effort to offer the highest level of service to our clients, we keep records 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.

Scammers Use Your Information to Gain Trust

Questionable agents will create a guise of authority and legitimacy, using the name of your lender, your street address or phone number.  They’ll use 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

Taking over another agent’s cases of many examples in this category.  They may try to get you out of one life insurance policy and into another identical or similar policy under a different name. An example maybe, if you have a whole life structured policy and an agent tries to get you out of your “outdated” or “poorly structured” policy into a “Burial Insurance” or “Final Expense” policy. What they aren’t telling you is your Whole life policy is the same as a  Final Expense or 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 muster 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. MPI OR Mortgage Protection Insurance is 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 occurring for different reasons:

  1. Your current agent is supposedly not doing a good enough job
  2. Your agent is getting out of the business
  3. Your agent did something illegal or otherwise nefarious or evil

So they tell you that you’re lucky they can change your policy to something that is a better fit and save you. This scam is very common. We run up against it several times per month- so we warn our clients to expect this type of a shady phone call. The idea is to plant a seed of doubt and concern. So they can get invited in the door, meet with the client and cancel their policy for one that is supposedly better. Once they arrive, under the guise of protecting the client from the big bad agent, it is easy to convince the unsuspecting client that they need to change policies.

Ironically, these deceptive agents know nothing about your policy, nor 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 actually training to do this just to make an extra buck.




Shady scammers will try to win your trust by telling you that they can lower your premiums. So you should ask them how they are able to do that. Most of the time they try to fool you into a lower rate by giving you less coverage.

Learn the Different Types of Policies

Not only is there less coverage but they may switch you into a plan that ends at after so many years. You either have to renew this newer term policy and now your health may have changed. Now you are subject to a new set of health rules that you may not qualify for similar coverage at a later date.. So you will end up with even less coverage than before and it is subject to future approval and renewals.  What these scammers do is switch your whole life insurance into a term policy at a lower cost. Learn the difference between a whole life which has no expiration date and a term policy that ends and requires renewal or your lose all benefits.


Beware of flimsy websites that do not have an authentic insurance website. In todays’ world it is quick and easy to set up a fly-by-night website with little or no substance. Scammers know you will try to check them out on the internet. They will setup a skeleton website that may look professional at first glance but it actually only has a few pages.

They use their fake site as verification to  you so they can quickly get your money. Do your research online Make sure there are blogs and testimonials. Check their site out against  a few brand names or an agent’s site that has validity.



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

shady agent scammer

Indicators Of A “Shady” Agent/Agency:

No state approved badge- They should wear a badge, not a nameplate. 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 one contact number -They should be easy to reach as well as their agency. Not just them.

No website or flimsy website -The website should be impressive and show high activity.

No website resources- Meaning they should have plentiful blogs, testimonials, etc. Are they in the business to give or to take? The website should provide indicators that offer resources to their clients because they care.

Unresponsive to your calls or emails-They are suddenly unavailable. Give them a call and send an email. Do they respond?

Cannot readily prove their access to highly 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 pricing software, without delay.

You can easily check their life insurance companiesratings via Google. You want A- or better.

Lousy reviews with the Better Business Bureau-BBB- Check with your BBB to discover their rating and reviews

Lousy Online reviews- Do a thorough internet search or the insurance company and agent.



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 an 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 make strides to be aware of what is going on in the industry. If you think you might have been a 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.