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Life insurance is more than a purchase; it is an investment in protecting your family’s financial future in case the worst should happen to you. Most insurance companies and agents work tirelessly to provide you with the right policies that fit your budget.

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Beaware of Life Insurance Scams

Unfortunately, a few unscrupulous agents may take advantage of you and provide plans that benefit their pocketbook more than your needs.

What follows are a few of the more common life insurance scams, so you can watch out for them in case they should occur to you.

Overstating Net Worth

This is where the insurance agent exaggerates your net worth on your life insurance application. The result is getting a bigger policy that you may not be able to afford. This is done for the commissions agents make on selling policies that are larger, even if you cannot pay premiums. Before signing, you will need to check out your net worth, as stated in the policy.

Never Pay the Agent Directly

Your agent should never get paid directly by you as they will likely put the money in their pocket and leave you without the proper coverage. Any offer by the agent to pay them directly should be refused, and you’ll want to report them to your state insurance department for possible disciplinary action.

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Annuities for Seniors

Annuities are part of many life insurance policies as they provide income after a pre-set period has passed so it can be enjoyed during retirement. The pre-set time is often 10 to 15 years, making them a sound investment if you are in your 40s or early 50s but not worth it if you are already at retirement age.

Considering the hefty fees imposed for removing the money early makes it a bad deal for seniors.


This scam involves the agent offering you a quote for the life insurance policy you requested and another lower quote for the policy regarding another line of insurance, such as auto or home. Of course, you may not need the other policy, and when combined, it often adds up to more than what you are paying now.

So, while you may consider the offer, do not take it and focus only on the quote for life insurance.

Life Insurance Owned by a Stranger

This is where a life insurance policy on you is owned by someone other than a spouse, parents, or other family members. It often occurs when a senior takes out a life insurance policy on themselves, then transfers the ownership to investors for cash.

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This practice is illegal in many states and not welcomed in the rest, so avoid this arrangement.

It’s important to know when to walk away, especially when you feel uncomfortable with some of the arrangements being made. Before you sign, read everything over and have a third party look at it if you have any questions.


Meet Aaron H., a senior life insurance agent from California with 15+ years of experience. With a major in finance, excellent analytical and communication skills, and a passion for helping clients find personalized solutions, Aaron is a trusted advisor in the industry. He stays up-to-date on the latest trends and developments by attending webinars and workshops, reading industry blogs, and writing informative blog posts on this website. Aaron also has a keen understanding of SEO and online marketing, which he uses to help his clients reach a wider audience and get the coverage they need. He cherishes spending quality time with his wife, two children, and elder parents.