Most Common Life Insurance Scams & How to Avoid Them
Life insurance scams trick families into sharing personal information, paying fake fees, or buying worthless policies. Learn the warning signs, how common life insurance scams work, and how to protect your loved ones from financial harm.
Table of Contents
Quick Facts
About this scam type
Life insurance scams often involve impersonating legitimate insurers, agents, lawyers, or government agencies. Scammers send letters, make calls, or set up fake websites to claim you are owed money or need to take urgent action. Their goal is to steal money, personal information, or both.
How scammers contact victims
Most life insurance scams reach victims by phone—especially through robocalls and call centers—but also use mail, email, and online ads. Phone scams allow fraudsters to use urgent, persuasive tactics and hide behind fake caller IDs. Seniors and families may also receive scam letters by mail or email.
Who is most at risk
Scammers target seniors and their families because they are more likely to have life insurance, may be less familiar with digital scams, and often worry about protecting loved ones. Confusion about beneficiaries and the complexity of insurance creates opportunities for fraud.
Understanding the risk level
Life insurance scams can lead to major financial losses, identity theft, or loss of legitimate benefits. Falling for a scam can also leave personal information exposed, putting families at risk for further fraud.
Most Common Life Insurance Scams
How it works: Scammers mail or email letters claiming to be from a lawyer or law firm. They say you are a beneficiary to an unclaimed life insurance policy or inheritance, then request fees or personal information to release the funds. These letters often use official-looking logos and claim urgency.
Real Example (FTC Consumer Alert, Aug 2023)
Dear [Name], I am an attorney representing the estate of [Deceased]. Our client left a $2 million unclaimed life insurance policy, of which you are the beneficiary. To process your inheritance, please send a fee of $2,350 and a copy of your ID. Red Flag Signs:
- • Unsolicited letter or email about unclaimed insurance money
- • Requests for fees to release policy funds
- • Urgent or secretive tone
How it works: Scammers pose as legitimate life insurance agents or companies, claiming there is an issue with your policy or that you must re-verify your information. Their goal is to collect sensitive details or payment for 'overdue' premiums on a nonexistent policy.
Phone Script Example
This is John from [Real Insurance Company]. We noticed a problem with your policy. Please provide your date of birth, policy number, and payment information now to avoid a lapse in coverage. Red Flag Signs:
- • Unexpected calls asking for personal or policy details
- • Pressure to 'prevent coverage loss' immediately
- • Demands for payment by wire, gift card, or prepaid debit
How it works: Fraudulent companies offer to 'find lost policies' for relatives, often targeting families after a loved one passes away. They may charge hefty search fees or steal information. Legitimate policy locator services like NAIC never charge up front for a basic search.
Common Variation
We found a life insurance benefit owed to your family. For a small fee, we’ll help you claim it—just fill out the attached form with your Social Security number. Red Flag Signs:
- • Upfront fees for 'policy searches' or 'beneficiary lookups'
- • Requests for Social Security number or sensitive details
- • No proof of connection to real insurance regulators
How it works: A fake agent convinces victims to buy or renew a policy, collects premium payments, and provides falsified documents. No actual policy exists, leaving the victim uninsured. These scams often appear after in-person pitches or through lead-gen calls.
NICB Warning Example
Congratulations, your new coverage is active. Please make checks payable to [Fake Agent] so we can finalize your $40,000 term life policy. Red Flag Signs:
- • Asked to pay premiums directly to an agent, not a company
- • Received suspicious certificates or unofficial documents
- • Cannot verify the agent’s licensing
How it works: Robocalls or ads claim you are 'pre-approved' for cheap life insurance. Callers may switch you to a high-pressure sales agent or harvest information for further scams. Legit companies do not cold-call to sell insurance this way.
Phone Script
This is an urgent message: You have been pre-approved for $250,000 in life insurance regardless of your medical history. Press 1 to claim. Red Flag Signs:
- • Unsolicited robocalls with too-good-to-be-true offers
- • Pressure to act immediately to secure 'approval'
- • Requests for upfront payment or sensitive information
How it works: After losing money to a scam, victims may be contacted by someone claiming to help recover their funds for a fee. This is often the original scammer or their partner, exploiting you a second time. Real agencies do not charge upfront for recovery.
FBI IC3 PSA Example
We are a government recovery team and can get your lost insurance premium back. Just pay our $2,000 processing fee upfront. Red Flag Signs:
- • Promises to recover losses for a fee
- • Contacted soon after reporting a scam
- • Claims to be from FBI, FTC, or government but uses Gmail/Yahoo email
Red Flags & Warning Signs
Top 5 Phrases Scammers Use
- 1 "You are owed money from an unclaimed policy"
This creates excitement and urgency to get you to act before checking for fraud.
- 2 "Immediate action required or your coverage will end"
Scammers use threats to push you into giving details or sending money fast.
- 3 "Pay processing or release fees to claim funds"
No legitimate life insurer will charge you to receive your own benefits.
- 4 "We need your Social Security number or ID to verify"
Sensitive data is often the real target, not helping you claim a policy.
- 5 "We can recover your lost funds or policy for a fee"
Recovery scams prey on victims twice, usually after an initial scam.
Scam Warning Signs
- Unsolicited requests for money or personal informationScammers pressure you to pay or share details out of the blue.
- Official-sounding letters demanding secrecyLegitimate companies want you to verify, not hide, their communications.
- Problems verifying the agent or companyYou cannot find the caller’s license or the company’s real contact info.
- Promises of guaranteed or pre-approved policiesNo legitimate company guarantees large policies with no requirements.
- Pressure to pay up front before any proofUpfront fees are rarely, if ever, required for genuine life insurance or recovery.
Legitimate Communications
- You can verify the agent’s license on your state’s insurance websiteAll real life insurance agents have to be licensed by state regulators.
- No upfront fees for policy claim processingAuthentic insurance companies do not ask for payment before releasing benefits.
- Official communications have verifiable contact infoYou can call back using a number from the official company website.
- Never asked to pay by wire, prepaid card, or gift cardLegitimate companies offer secure ways to pay premiums or claim funds.
- You receive a policy or payout only after documentation and due processClaiming benefits involves paperwork and timelines regulated by law.
How to Protect Yourself From Life Insurance Scams
Use these steps to keep yourself and your family safe from life insurance fraud. Protect your personal data and your money before responding to any offers or claims.
- 1. Never Pay Upfront Fees for Claims
Legitimate life insurance companies never charge a fee to process a claim. If someone says you must pay to receive funds, it is a scam.
You can check claim requirements by contacting your insurer directly using the number on your policy.
- 2. Always Verify the Agent or Company
Ask for the company's official contact info and the agent’s license number. Verify both with your state insurance department or the NAIC before sharing any information.
Most state insurance departments let you search agent licenses for free online.
- 3. Be Skeptical of Unsolicited Offers
If you get a letter, call, or email about a policy you never heard of, contact the supposed sender directly with information you find yourself. Do not use numbers or links in the message.
- 4. Use the Official NAIC Policy Locator for Lost Policies
If you are searching for a missing policy, only use the verified National Association of Insurance Commissioners Life Insurance Policy Locator. It does not charge upfront fees and explains the timeframes for searches.
- 5. Do Not Share Personal Information Over the Phone
Scammers will pressure you to provide your Social Security number, policy details, or ID. Hang up and only share sensitive data after you have confirmed the person you are dealing with is legitimate.
- 6. Be Wary of Recovery Service Offers
If you lost money to a scam, report it to authorities. Never pay a fee to 'recover' losses. Government agencies and real companies do not charge upfront for help recovering lost funds.
Sign up with Lifeguard to get real-time scam detection, identity monitoring, and protection for your family’s insurance and financial accounts.
What to Do If You Are a Victim
Act quickly to limit the damage if you suspect you or a loved one has fallen for a life insurance scam. Here are the most important steps.
- 1. Stop All Contact With the Scammer (Do immediately)
Do not reply to messages, calls, or emails from anyone you suspect is running a scam. Block their number and save all records.
- 2. Contact Your Life Insurance Company Directly (Do immediately)
Use the phone number listed on your policy or the insurer’s official website to check your account status and alert them to possible fraud.
- 3. Report the Scam to Authorities (Do immediately)
File a complaint with the FTC at www.ReportFraud.ftc.gov, the FBI’s IC3 at www.ic3.gov, and your state’s Department of Insurance. If you received a scam letter by mail, report it to the U.S. Postal Inspection Service.
- 4. Monitor Your Accounts and Credit (Within 24 hours)
Check your bank accounts and credit report for unauthorized transactions or signs of identity theft. Report any suspicious activity to your bank or credit monitoring service.
- 5. Consider a Fraud Alert or Credit Freeze (Within 24 hours)
If your Social Security number or financial information was given out, you may place a fraud alert or freeze with the credit bureaus.
- 6. Seek Support if Needed
Talk with family or your local Area Agency on Aging for help and emotional support. Scams can be distressing, but you are not alone.
For more information: <ul><li><a href="https://www.ftc.gov/news-events/news/press-releases/2023/08/ftc-warns-consumers-about-life-insurance-scam-letters">FTC Consumer Alert (2023)</a></li><li><a href="https://www.naic.org/consumer/life-insurance-policy-locator">NAIC Life Insurance Policy Locator</a></li><li><a href="https://www.uspis.gov/news/scam-article/inheritance-scams">USPIS Inheritance Scam Guidance</a></li><li><a href="https://www.nicb.org/news/news-releases/alert-phone-scams-posing-insurance-agents">NICB Insurance Scam Warning</a></li></ul>
Frequently Asked Questions
Scam claim letters often arrive out of the blue, demand immediate payment or sensitive data, and have contact details that do not match the insurer’s official website. Always verify with the insurance company using your own trusted contact information.
Yes. The National Association of Insurance Commissioners (NAIC) operates an official, free Policy Locator service. Avoid services that demand money upfront. The NAIC service may take several weeks to process requests.
No. Legitimate life insurance companies do not require upfront fees to process claims or release funds. Any request for payment to receive a benefit is a red flag.
Stop contact right away, alert your insurance company, and report the scam to the FTC, FBI IC3, and your state’s Department of Insurance. Monitor your accounts and consider a credit freeze if you shared personal information.
Report scams to the FTC at ReportFraud.ftc.gov, the FBI’s Internet Crime Complaint Center (IC3), your state Department of Insurance, and the U.S. Postal Inspection Service for mail-based fraud.
Ask for the agent’s license number and check it on your state insurance department’s website. All real insurance agents must be registered and licensed to sell policies in your state.