June 2023
Fraud Alert

How to Spot 5 Common Online Life Insurance Scams

The internet has made buying life insurance more convenient but has also increased the risk of fraud. Common online life insurance scams involve tactics such as falsely claiming issues with your policy, surprising you as a beneficiary, creating fake websites, offering unrealistic teaser rates, and providing dishonest online quotes.

1. There's a Problem with Your Life Insurance Policy

This scam begins with an email saying there's a problem with your existing policy. You may receive an email that looks like it comes from your life insurance company — but it's been sent by a fraudster who carefully designed the message to make it look official.

The email will claim there's a problem with your policy. For example, the email may say your last premium didn't go through, or the insurance company canceled your policy altogether. It will then tell you that if you want to keep your coverage, you'll need to provide personal information like your Social Security number, the password to access your life insurance policy online or your credit card information.

2. Surprise! You're a Beneficiary

For this scam, you receive an email claiming you benefit from someone else's policy. The email will say you're connected to another life insurance policy in some way — perhaps through someone who supposedly died and named you as beneficiary or because someone purchased a policy on your behalf. Once again, the fraudsters will ask for your personal information in the hope that you reply. 

3. Fake Life Insurance Websites

Scam websites pretending to be actual life insurance companies often promise you can sign up online. They may promote rates that are much lower than the competition — or they may make it incredibly easy to sign up, perhaps claiming they don't require any health underwriting. You'll need to submit your credit card or bank information to "sign up," and when you do, the fraudsters steal your money.

4. Unbelievable 'Teaser' Rates

A life insurance website will promote unbelievable "teaser" rates. This is less of a scam and more of a dishonest marketing approach. An online life insurance company will advertise premiums at their very best underwriting class, one where people are the healthiest and receive the highest possible discount. Only a tiny share of applicants will qualify for this rate. Only after you apply do you realize your coverage will cost much more.

5. Dishonest Online Quotes

For this scam, the website lies about a quick online quote. Websites say they'll give you an instant quote online in exchange for your contact information. What they actually do is sell your information to multiple insurance agents so they can contact you and prepare a quote themselves. You think you'll be receiving information when you’re just signing up to put your name on a sales list!

How to Avoid Life Insurance Fraud

So, how do you avoid being the victim of a life insurance scam? Here are some quick tips to protect yourself.

• Don’t reply to unsolicited emails.

• Verify information with your insurance company directly.

• Be cautious of unexpected payouts and aware of too-good-to-be-true offers.

• Read fine print and verify company legitimacy.

• Consult trusted sources, like your financial advisor.

The internet has opened up countless new opportunities for us — but it's done so for fraudsters as well. Keep this advice in mind to help avoid becoming another victim of life insurance fraud.

If you have questions, please contact us.

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