How to Spot 5 Common Online Life Insurance Scams

senior couple at home researches on laptop how to spot five common online life insurance scams

Key Takeaways

  • The internet has made buying life insurance more convenient but has also increased the risk of fraud.
  • Common scams include fake emails about policy problems, unexpected beneficiary notifications, fake insurance websites, unrealistic teaser rates, and dishonest online quotes.
  • To avoid fraud, don't reply to unsolicited emails, verify information with your insurance company directly, be cautious of unexpected payouts, read fine print, verify company legitimacy, and consult trusted sources.
  • Use common sense, be aware of too-good-to-be-true offers, and consider building a relationship with a local financial representative for guidance.

The internet has made life simpler in a lot of ways when it comes to buying life insurance. You can request quotes, compare companies and search for a local financial representative online. However, this convenience is a two-way street.

Why? The internet has also made it easier for online scammers to commit life insurance fraud. Here's what you should know to help avoid becoming the victim of life insurance scams, starting with five of the most common schemes.

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 actually been sent by a criminal 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 thieves will ask for your personal information in the hope that you reply

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3. Fake Life Insurance Websites

For this online scam, you run across a fake website posing as a life insurance company. 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 thieves steal your money.

4. Unbelievable 'Teaser' Rates

You may have seen this scheme before: A life insurance website promotes 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. In reality, only a tiny share of applicants 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 in reality you're just signing up to put your name on a sales list.

How to Avoid Life Insurance Fraud

If you receive an unsolicited email requesting information, do not reply. If it claims to be from your own life insurance company, call the company's customer service hotline or your financial representative instead. If they do need information, you can provide it more safely in person or over the phone.

Be suspicious if you're notified about a life insurance payout from a policy you didn't know existed — especially if you don't know the person who set up the policy. Criminals hope you'll get so excited about the money you won't realize it's a scam.

As you browse life insurance websites, always read the fine print at the bottom of the site. It may point out that the listed rates are for the highest possible health discount, or that by signing up you agree to be contacted by other agents.

If you have trouble deciding whether a website or company is legitimate, you can contact your state's insurance department. They can verify whether a company actually exists and if it's allowed to sell in your area. You can find your department's contact information through the National Association of Insurance Commissioners.1

Find the Right Life Insurance Company

If you search for quotes or apply for life insurance online, make sure you're dealing with a reputable company. Check the financial stability of the company with rating agencies like A.M. Best Rating Services and Fitch Ratings.2,3 Consider also searching the Better Business Bureau to see if the company has any consumer complaints, especially if it's a smaller company.4 Finally, use common sense as you browse offers. If an online company promotes something that sounds too good to be true, that may be a warning sign of a scam.

Talk with a Financial Representative
As you browse quotes online, consider speaking with a local financial representative at an established life insurance company.

You may feel more confident about an insurance professional's advice when you build a personal relationship with them — as opposed to dealing with strangers over the internet. The internet has opened up countless new opportunities for us — but it's done so for criminals as well. Keep this advice in mind to help avoid becoming another victim of life insurance fraud.

   Compare life insurance options and steer clear of scams with our expert guidance. Get a Life Insurance Quote  


  1. Insurance Departments.
  2. Search for a Rating.
  3. Fitch Ratings.
  4. Better Business Bureau.

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