How to Identify a Life Insurance or Inheritance Scam: Internet Scambusters #1,158
Fraud can happen to anyone, especially those who don’t take steps to protect themselves. Two common types of scams are life insurance policy scams and inheritance scams. These scams can target innocent people and families, causing significant financial loss as well as stress and emotional pain.
Whether you're a policyholder, financial advisor, heir, or someone looking out for a loved one, this article will provide clarity and resources. Let’s learn more...
Life Insurance and Inheritance Scams: Don't Ignore These Red Flags!
Life insurance and inheritance plans are valuable tools that provide peace of mind, but they are frequent targets for scams. Scammers actively exploit these financial instruments to deceive seniors, baby boomers, and financial planners, often resulting in significant financial harm. Recognizing these scams is essential to protect yourself and your loved ones effectively. Take action to safeguard your finances and stay informed.
Common inheritance scams involve:
- Fake Heir Scams – Scammers claim to be distant relatives or entitled heirs.
- Phishing Attempts – Victims receive emails or phone calls about a “hidden inheritance” that requires upfront fees to claim.
- Forgery – Criminals may forge wills or estate documents to divert assets.
Is There a Difference Between Life Insurance Fraud and Inheritance Fraud?
While both life insurance fraud and inheritance fraud involve financial deception, they have distinct differences.
Life Insurance Scams center on policies that pay out after death. The scams generally involve policy manipulation, fake claims, or false documents.
Inheritance Scams revolve around estates that are passed on after a death. Victims may encounter fake heirs, forged wills, or fraudulent communication.
Both scams target the financial consequences of a death, but each focuses on different methods to achieve financial gain.
Life Insurance Scams
Even though not all life insurance scams target individuals, people can still fall victim.
Common types of life insurance scams include:
- Fake Insurance Policies – Scammers sell policies that don't exist and take the premium money.
- Agent Misconduct – Dishonest agents change existing policies to benefit themselves.
- Fraudulent Claims – Scammers might submit false claims to take the benefits after a policyholder dies.
Inheritance Scams
Inheritance scams are not talked about much, but they can cause serious harm. This scam often targets heirs or estate executors by exploiting their trust and lack of legal knowledge. A study from 2020 found that inheritance scams are increasing, with many victims unaware of the fraud until it is too late.
Primary Targets of These Scams
Scammers often target individuals they consider vulnerable, including:
- The Elderly – Scammers often target older adults, assuming they may be less tech-savvy or more trusting.
- Grieving Heirs – Individuals mourning the loss of a loved one can be particularly vulnerable.
- Low-Income Policyholders – Some scammers target low-income individuals, assuming they lack access to legal or financial advice.
- New Investors – Individuals unfamiliar with life insurance or estate planning are common targets.
Red Flags for Life Insurance Fraud
Here are some warning signs to watch for when it comes to life insurance fraud:
- High-Pressure Sales Tactics – Agents or salespeople pushing you to purchase a policy without giving you time to review it.
- Unlicensed Agents – Always verify the credentials of anyone selling insurance.
- Unexplained Policy Changes – Unauthorized adjustments to your policy or beneficiaries.
- Requests for Cash Payments – Legitimate insurance companies never ask for cash-only transactions.
Red Flags for Inheritance Fraud
Similarly, inheritance fraud has its own set of red flags:
- Unexpected Communication – Emails or calls from unknown sources claiming you’ve inherited money.
- Upfront Fees – Being asked to pay taxes or legal fees before claiming an inheritance.
- Pressure to Act Quickly – Scammers often create urgency to prevent victims from investigating.
- Unfamiliar Executors or Heirs – Claims from individuals with no verifiable relationship to the deceased.
How Do Scammers Find Victims?
Scammers use various tactics to find potential victims:
- Online Research – Public obituaries and death notices provide scammers with names, family details, and financial leads.
- Data Breaches – Personal information stolen in breaches can be used to craft convincing scams.
- Phishing Emails – Scammers send mass emails, hoping someone will respond.
- Social Engineering – Building trust through personal interactions to exploit victims.
What to Do If A Fake Insurance Policy Scams You
It’s essential to take immediate action as soon as you realize you’ve been scammed.
- Contact Your Insurer – Report the issue immediately and confirm whether the policy is legitimate.
- File a Complaint – Contact your state's insurance department or consumer protection agency.
- Consult Legal Advisors – Get help from a professional to find ways to recover your lost money.
- Notify Law Enforcement – File a police report, as this creates an official record.
Where to Report Life Insurance Fraud
If you suspect life insurance fraud, here are key organizations to contact:
- National Association of Insurance Commissioners (NAIC) – File complaints or verify agents and insurers.
- The Federal Bureau of Investigation (FBI) – Report any fraud that crosses state lines or involves significant sums with the Internet Crime Complaint Center (IC3)
- Your State Insurance Department – A state-specific agency ensures your case is investigated locally.
Where to Report Inheritance Fraud
For inheritance fraud, consider reaching out to:
- The Federal Trade Commission (FTC) – File inheritance scam complaints.
- Consumer Financial Protection Bureau (CFPB) – Report financial scams affecting consumers.
- Estate Attorneys: Legal professionals can provide tailored advice if your case involves wills or forged documents.
Can Victims Recover Their Money?
Recovering lost funds can be difficult, but it is not impossible:
- Chargebacks – Contact your bank or credit card provider to dispute fraudulent transactions.
- Legal Action – If the scammer is identifiable, a lawsuit could potentially recover some losses.
- Restitution Programs – Some fraud cases lead to court-ordered restitution for victims.
If you or someone you know has been affected, use these resources for guidance:
- AARP Fraud Watch Network – Specializes in protecting seniors from scams.
- Better Business Bureau (BBB) – Verify the legitimacy of companies and file complaints.
Check out this article to learn about life insurance policies and inheritance scams: Contact About Long-Lost Relative’s Life Insurance Policy or an Inheritance? It’s a SCAM.
Conclusion
To protect yourself from life insurance and inheritance fraud, it’s important to understand how these scams work. Stay informed, look for warning signs, and know how to report any suspicious activity. This can help you and your loved ones avoid becoming victims.
If you feel something is off, trust your instincts and act quickly. For help, talk to a legal or financial advisor you trust. They can guide you on the next steps for your situation.
Stay Informed! Stay Safe.