Watch Out for These Life Insurance Scams

Life Insurance

Watch Out for These Life Insurance Scams

Posted by COTO Insurance & Financial Services
4 years ago | February 26, 2018

It is a sad fact of life that there are some people who prey upon retirees and even bereaved families. These con artists often target life insurance plans, so we felt it was important to warn our customers of some common scams in circulation.

Phony life insurance payouts. Imagine that you’ve lost your parent or spouse. A eulogy is published in the local paper, potentially giving would-be thieves some clues. But you aren’t thinking of this when the phone rings, and the person on the other end informs you that you’re due to receive a large life insurance payout. This person is very convincing, and you’ve heard of cases in which deceased people left behind “surprise” life insurance policies. So, you listen as this person explains how you can claim the benefits…

This is when they inform you that the payout can be wired to your checking account, and they need the account information. Or, perhaps there is some sort of “fee” you must pay, in order to collect the money.

Real life insurance companies do not operate this way. When you’re in doubt, contact the state insurance commissioner’s office, where records of all life insurance policies are maintained.

Life insurance on strangers? You might be offered a “free” life insurance policy. All you need to do is sign up, and an “investor” will cover your premiums for you. They might even offer you a little bit of tempting cash up-front.

But here’s the catch: After an initial period, such as two years, the policy is transferred to this “investor”. One day, when you die, the investor will profit from your passing.

These operations are illegal in some states, while still legal in others. However, most insurance companies regard them as a form of malpractice, and many participants have been sued (including the apparent victims in these stories).

Remember the old adage: If it’s too good to be true, it probably isn’t true. There are some very affordable life insurance policies on the market, and we’d be happy to help you locate one that is right for you. But please, always work with a licensed life insurance professional (that would be us), and avoid any situations that seem dubious to you.

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