Last Updated: September 2020
Life insurance, like any other product you purchase online, can be risky if you don’t know what you’re looking for. As you shop for a term life insurance policy online, you may run into some scheming agents who care more about dollar signs than your well-being.
The term life insurance marketplace is big and there are many agents who will do anything to get your business.
Luckily, for all the misleading brokers out there, you’ll be able to find a number of reputable life insurance providers dedicated to helping you secure the most affordable policy possible to meet your needs.
At Rootfin, we want to help you weed out the bad from the good. With that mission in mind, we’ve compiled a list of the three biggest scams we see in the online term life insurance marketplace and how you can avoid them.
- Scam #1 – Lead Aggregators Posing as Life Insurance Agencies
- Scam #2 – Captive Life Insurance Agents Telling You They Offer the Lowest Rates
- Scam #3 – Bait and Switch or the “Preferred Plus Rates” Scam
- How to Avoid Online Life Insurance Scams
Scam #1 – Lead Aggregators Posing as Life Insurance Agencies
Don’t you hate it when you open your inbox to find a whole host of messages from services or brands you never signed up for? Or you get a phone call congratulating you on winning a Caribbean cruise you never entered to win?
When that happens, your information has likely been aggregated, meaning you signed up for one site who shared all of your information with other companies, enlisting you in their contact list whether you want to be there or not.
Lead aggregators pose as life insurance agencies all the time, misleading unassuming customers who are shopping for life insurance quotes.
A lead aggregator is a website that takes your contact information and responses to their questions, then sells that data to up to 6 agents (sometimes more) when you enter your contact information on the website.
As soon as you submit your life insurance request, within minutes you’ll start receiving unsolicited calls from companies vying for your business.
And they can be incessant with their attempts to contact you. So unless you want your phone to blow up for the next few weeks, I would be on the lookout for these sneaky types of websites.
How to Avoid Lead Aggregators when Shopping for Life Insurance
So, how can you tell what websites aren’t lead aggregators? It’s actually pretty easy when you know what to look for.
As you start shopping for life insurance online, be sure to keep your eyes open for these three things:
- About Us: To begin with, does the website have an About Us section? If not, run. If so, look for pictures, emails, and contact forms to make sure it’s a real company with experienced agents who are ready and able to help you.
- Phone number: Is there a phone number displayed prominently? This might be the biggest giveaway. Every real agency will want you to call them and will display their number on nearly every page. Lead aggregators won’t do this because they are marketers selling their leads.
- Fine print: Always read the fine print. Buried deep in a lead aggregator website, you should find the fine print that will say multiple agents will be contacting you.
No matter how well a website might be designed or what heartwarming slogans they broadcast, if they don’t pass the three tests above, you should proceed with caution.
Otherwise, you’ll be declining phone calls you never asked for left and right.
Scam #2 – Captive Life Insurance Agents Telling You They Offer the Lowest Rates
A captive agent in life insurance can only offer you a policy from one company.
Consulting a captive agent is like going to a car dealership and expecting them to tell you that you can get a better deal on a nicer vehicle at the competing dealer a few miles down the road. They won’t do it.
A captive agent may be highly persuasive, likely telling you that the policy they’re touting exceeds every other plan on the market, suggesting you’ll be hard-pressed to find better rates with other top life insurance companies.
Work with an Independent Agent Instead
In order to find the best term life insurance rates, you need an agent who will compare all the individual life insurance policies on the market.
It is far wiser to work with an independent agent, as independent agents can represent as many companies as they want.
Rather than focusing on selling a product, they’re focused on you. In other words, they work on behalf of the consumer, not the life insurance company.
How Do You Know If Your Life Insurance Agent is Captive or Independent?
The best way to know if you are dealing with an independent life insurance broker on the web is to make sure their website features multiple life insurance companies. If more than one company is not displayed across their website, then they are probably a captive agent and you should definitely look elsewhere.
Shopping for life insurance is similar to making any other big purchase. Doing a bit of research, comparing rates, and consulting with an independent agent can save you a tremendous amount of money.
Don’t automatically settle for the first quote that comes your way, no matter how persuasive the pitch might be. You should always get several quotes and compare multiple life insurance carriers.
Scam #3 – Bait and Switch or the “Preferred Plus Rates” Scam
If you are not familiar with how life insurance companies dole out rates to customers, they do so using a rating class scale based on factors like your age, height, weight, health, family history, and lifestyle. Each of these factors is used to assess how much of a risk you pose to the life insurance company.
The lower the risk, the higher your rate class, which means more affordable premiums for you. Within that rating system, preferred plus life insurance rates are the best you can qualify for.
But there’s one problem: only around 10% of consumers can qualify for these rates. So if you aren’t in excellent health you probably won’t fall into this coveted category.
But not all agents want you to know that. In fact, some call center life insurance agents are trained to quote “preferred plus” rates, knowing very well the consumer cannot qualify for them and that the rate will be higher once the approval comes through.
This is a bait and switch technique. They offer you a low rate to earn your business, then come back with a much higher rate. It’s a strategy that unfortunately works for a lot of companies.
Many consumers will take a higher rate once it’s approved because they already invested their time and energy into it. The bait and switch scam banks on this way of thinking.
How to Avoid Online Life Insurance Scams
Life insurance scams like the ones above are unfortunately common occurrences. People are constantly searching for life insurance, trusting that the agents and companies they encounter have their best interests at heart.
Taking the time to review life insurance companies, compare rates, and ask questions is critical to finding the best rates and avoiding scammers. If you’re looking for honest quotes and helpful information on life insurance, you’ve come to the right place.
We can connect you with a number of life insurance options and answer all of your questions.
In moments, you could have quotes from providers across the country, presenting you with all the information you need to make a decision on purchasing life insurance for you and your family.
No matter what, be mindful of these term life insurance scams while you’re searching online. You’re well on your way to finding the best rates you can qualify for.