Life insurance is a very useful tool for those who understand it. Unfortunately, it’s also a hotbed for con-artists who like to take advantage of those who don’t.

Life insurance scams are abundant, unfortunately, and they have the potential to cause some serious harm to you and your family — if you aren’t careful. 

Knowing what schemes are out there will help you stay safe when you’re shopping for policies, so read on to learn to spot these frauds.

Identity Theft Scams

This is one that you’ve probably heard of before, because it’s not limited to only life insurance. Identity theft is when a scammer steals your personal information and then uses it to commit fraudulent actions. 

They might open new accounts in your name, or use your existing accounts to make purchases without your knowledge — it’s rather pernicious and can seriously mess with your financial situation.

When it comes to life insurance, scammers will often try to nab your personal info by asking you for it while impersonating someone from your insurance provider. 

They might try to convince you that there’s a “problem with your policy” and they need your details to set it right, or that you’re late on some payments and need your credit card to process said payment.

To protect yourself, it’s best to keep your personal details close to the vest and verify the identity of anyone who asks you about handing over your information.

Churning

Sometimes it’s your insurance provider who is being unscrupulous. 

Churning is one such example, in which an agent might approach you and offer to replace your existing policy with one of greater value. 

In actuality, though, they’ll be setting you up with a less valuable policy — hoping that you’ll be none-the-wiser and keep on paying the same amount for lesser policy.

If you don’t regularly check your policy details, then you might fall victim to this sort of scam. Keep your guard up when you receive such requests, and make sure that actions like these come with the proper supporting documentation.

Fake Companies and Fraudulent Agents

Though rare, sometimes scammers will set up entire fake life insurance companies to take your money and run. The counter to this is simple, though — make sure you do plenty of research on an insurance provider before doing business with them.

In other instances, untrustworthy agents may claim to be affiliated with a legitimate insurer and then try to scam you. They might claim that they will set up a policy (but then don’t, and pocket your premiums for themselves). 

Or they might quote you higher than the actual price of a policy and keep the difference. In either case, staying vigilant and performing your own research before agreeing to anything is the best way to safeguard yourself against trouble.