Life insurance scams happen every day, and becoming a victim can be costly and life changing. The FBI estimates that the total cost of non-health insurance fraud is more than $40 billion per year. (Read about car insurance scams here.)
If you are in the process of taking out a life insurance policy, updating an existing policy or have been contacted about an existing or new policy, understanding these scams is crucial to avoid becoming a victim. Read on to learn the different ways scam artists try to trick you and the best ways to determine whether something is legit.
Types of Life Insurance Scams
Life insurance scams can occur over the phone, by email and even through social media. In each medium, the scammer will target unsuspecting people by impersonating legitimate agents of well-known insurance companies.
With social media becoming a more popular way for people to learn about and connect with life insurance agents, it’s important to be wary of common misconceptions and misinformation.
“Agents advertising concepts like ‘infinite banking’ or ‘being your own bank’ to get rich can be misleading,” warned Timothy Ferreira, Life and Annuity Manager at AAA Northeast. “They can lure you into purchasing very costly insurance policies that may not fit your needs and primarily benefit the agent in the form of big commissions.”
In a phone scam, a scammer may call you claiming there is an urgent need to buy or update a life insurance policy. They may use high-pressure tactics, offering bogus special rates for a limited time.
Email scams operate in a similar way, but with additional tricks. In this scenario, scammers may send emails that appear to come from reputable insurance companies – even using logos and email addresses that look genuine. These emails may contain links to fake websites that look official at a passing glance.
In both phone and email life insurance scams, the main goal is to steal personal and financial information, so it’s essential to verify the source of any unsolicited life insurance offers by contacting the insurance company directly.
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We are currently unaware of any scams that impersonate AAA Northeast life insurance agents. If you are ever unsure, we encourage you to reach out to us to verify any correspondence.
How To Spot Life Insurance Scams
While scammers are getting better at hiding their tracks, there are certain red flags that can help to quickly identify if something is a scam.
One of the first signs you’ll recognize is feeling pressured to act quickly and impulsively. Scammers often use tactics that create a sense of urgency to get you to agree on the spot. Legitimate insurance agents will give you time to review and consider your options without pushing you into a decision.
Suspicious contact methods can also be warning signs. “While purchasing life insurance over the phone is commonplace today,” Ferreira said, “being called by a non-business phone number should raise a red flag.” The same goes for email: If you are contacted from a personal email address rather than one associated with a recognized insurance company, it is likely a scam.
Preventive Measures
There are a few things you can do to protect yourself a life insurance scam:
- Ask for the insurance company’s website and use its search function to look up the agent you’re in contact with.
- Search for the agent’s license number on your state’s Department of Business Regulation website. If they appear, it will indicate that the person is authorized to sell life insurance.
- Avoid high-pressure sales and be skeptical of agents pushing you to buy quickly without explanation or alternatives.
- Make sure you understand your policy by thoroughly reading over the terms, premiums, coverage and exclusions.
Support For Life Insurance Scam Victims
If you have been a victim of a life insurance fraud, contact your state insurance agency.
Connecticut – Phone: 860-297-3800; website
Massachusetts – Phone: 617-521-7794; website
New Hampshire – Hotline: 800-852-3416; Phone: 603-271-2261; website
New Jersey – Hotline: 800-446-7467; Phone: 609-292-7272; website
New York – Hotline: 888-372-8369; website
Rhode Island – Phone: 401-462-9520; website
Licensed AAA life insurance agents are available to support AAA members in branch offices. Learn more.
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