Trustworthy? Not so Much: How to Avoid Life Insurance Scams (And How to Find a Good Provider)

Paper family of four under a Life Insurance paper cutout umbrella

Are you looking to purchase a life insurance policy?

First, you’re not alone. About 40 percent of Americans don’t have life insurance. And among those who have, 1 in 5 don’t have adequate coverage.

Second, buying life insurance is a smart financial decision. It ensures those who depend on you financially will be okay after you’re gone.

Unfortunately, the world of life insurance is littered with scams and fraud. If you’re not careful, it’s easy to fall prey to scammers who can rip you off your money.

To keep you safe, we’re sharing how to avoid life insurance scams and ultimately find a good provider.

Fake Life Insurance Websites

At a time when more than 79 percent of Americans are shopping online, nobody would blame you for looking up life insurance providers on the web. However, the internet is the biggest enabler of financial scams and there are many fake life insurance websites.

While there’s little you can do to avoid landing on these websites, you’ve got the power to navigate away from them. You just need to know how to spot the suspicious signs.

Be extra careful when you find a website offering quick sign-ups and premiums that are too good to be true (below average market rates). You might end up buying a policy and paying premiums to a company that isn’t even licensed to sell insurance.

Life insurance underwriting is a lengthy process and there’s a lot of paperwork involved. An authentic company website will never rush you into signing up.

Instant Online Quotes

Still, on the case of insurance websites, you’re bound to find some offering instant quotes.

Most shoppers usually find this service useful because it compares offers from multiple life insurance companies. The only problem is not all instant quote services are legitimate. Some are only out to gather user information, which they then sell to insurance brokerages or carriers.

If someone has contacted you recently to sell a life insurance policy and you were left wondering how they got your contact information, your bid to get an instant life insurance quote is likely to blame.

Investigate the authenticity of the website offering an instant quote service before keying in your details. Look up online reviews to find out what other people are saying about the website.

Your Life Insurance Policy Has a Problem

Scammers don’t just target people looking to buy life insurance. They also target the insured.

One of these fine days you might receive a call or email informing you that your policy has a problem. Unless you’re paying attention, everything about the communication will appear to be from your insurance company.

To solve the problem, the person on the other end will usually ask you to take a certain action, such as telling them your social security number. With your personal information, the scammers can steal from you or commit crimes under your name.

Generally, flag such calls or emails as spam. If someone ever tells you your policy has a problem, call your provider through the official customer service line or speak to your agent to verify the information.

Don’t Get Caught in Life Insurance Scams

Although security agencies are doing all they can to eliminate life insurance scams, the scammers are upping their game and swindling unsuspecting people.

Lucky for you, we’ve shared a few tips you can use to spot an insurance scam and enhance your chances of finding a legitimate provider.

As you digest the tips, here is what you should do if your purse is stolen.