Is Life Insurance A Scam? // 11 Reasons Why It Isn’t In Dec 2023?

You know that you need life insurance, but you are probably concerned with made up rumors, or friends trying to convince you that it is a scam.

But hear me out, what if I told you that not only is life insurance legit, but you are only hurting your family if you don’t have any coverage.

is life insurance a scam

In this post I will go over several reasons why life insurance isn’t a scam, how to avoid being scammed by a life insurance agent and scams, you, yourself, should avoid trying to do.

Is Life Insurance A Scam?

While this is a fundamental question, I sometimes find myself frustrated at the number of people who say things like: "Life insurance is a scam" or "life insurance is just a hustle."

The purpose of life insurance is to insure your life in the case of your death. If you were to pass away, it would pay out a certain amount to keep your family in a financially stable position.

It is wasn't created to make your family super-rich if you were to pass away, and it wasn't meant to be your family's retirement plan.  There is also a misconception about Term life insurance because you traditionally will lose your coverage at the end of the term.

Term policies were set up this way because naturally, over time, you and your family should be in an entirely different financial position. 


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11 Reasons Life Insurance Is NOT A Scam:

1. Your State Is Watching

Just like insurance agents, life insurance companies are also mandated by the Department Of Insurance in your specific state.

If they do anything related to a scam or fraud they can be fined huge penalties.

The insurance company can also be closed, and they can do jail time depending on how severe the situation is.

If you have an issue with an insurance company, reaching out to the department of insurance in your state should be your first choice.

2. People Die From Unexpected Accidents

I was just watching the news today and over 10 people have died at Mount Everest due to crowding.

It seems like it doesn't happen, but accidental deaths happen all of the time, just recently the below two accidents happened:

Auburn announcer
Rod Bramblett and his wife were recently killed in an auto accident after they were rear ended by a 16 year old in a jeep (who was probably texting and driving).

wife and daughter of Howard Moore, the University of Wisconsin assistant basketball coach, were killed in a car crash in Michigan that also injured Moore and his son. 

His wife and daughter died after their vehicle was struck head-on just after 2 a.m. by a car driving westbound in the eastbound lane.

The accidents look to have happened a day apart, and they are both horrific.  

My husband and I even refuse to go to Lake Lanier because almost every other day someone has drowned or gone missing.

There is no way to know when our time will be up, but we can control how our family will be financially cared for when we pass away.

3. Funerals are expensive

I don't know too many people who can come up with $10,000 to $15,000 to bury someone without a moments notice.

Most of us don' t have $3,000 in the bank for an emergency, so trying to come up with almost 3 times more than that would be impossible.

It's no reason there are soo many GoFundMe accounts asking for money to bury people.

Unfortunately, a $20 to $30 per month insurance policy could have taken care of the funeral and given the family some financial peace of mind.

4. Debt stinks and it will be passed on to those you love

It's easy to believe that your debts die with you; however, this couldn't be further from the truth.

You are going to be leaving things like car notes, mortgages, and credit card bills behind.

In a community property state, the debtors can even come after your spouse for the income. 

life insurance scam

This usually happens because the income in those states you both are responsible for all debt.

While you might be resting in peace, your family will be going through a financial melt down.

5. To ensure the financial security of your business

If you are a small business owner or trying to grow into a big business, passing away could derail that dream for yourself, your partners and your family.

Having life insurance to make sure your family could hire someone to replace you, have a few months of cash flow to keep the business running, or so that your partners can buy your shares is essential.

If your family's livelihood is dependent on your business you should have steps in place to make sure the business can continue to run without you or that your family is financially able to move on.

6. Protect your children’s future

I always say that you should live "with" your kids, not "for" your kids.  I say this because sometimes parents get lost in the lives of their kids and forget to live their own life.

However, I don't think there is anything more important than the future of our children.  

The kids of today will shape the future of tomorrow and making sure they have the financial backing to be prepared is paramount.

will they be able to go to college, will they be able to get that extra tutor they need to pass a class?  

Those are important questions and having a life insurance policy would allow you to say yes to most of these questions.


Term Life insurance by state.

With a Life Insurance policy you can take care of your family the right way.

Should anything happen to you, you'll want to leave your loved ones a financial nest egg for their wellbeing. Click on your state to find out more.

AlabamaALAlaskaAKArizonaAZArkansasARCaliforniaCAColoradoCOConnecticutDelawareFloridaFLGeorgiaGAIdahoIDIllinoisILIndianaINIowaIAKansasKSKentuckyKYLouisianaLAMaineMEMarylandMassachusettsMichiganMIMinnesotaMNMississippiMSMissouriMOMontanaMTNebraskaNENevadaNVNew HampshireNew JerseyNew MexicoNMNew YorkNYNorth CarolinaNCNorth DakotaNDOhioOHOklahomaOKOregonORPennsylvaniaPARhode IslandSouth CarolinaSCSouth DakotaSDTennesseeTNTexasTXUtahUTVermontVirginiaVAWAWest VirginiaWVWisconsinWIWyomingWYVermontVTNew HampshireNHMassachusettsMAConnecticutCTNew JerseyNJMarylandMDHawaiiHIRhode IslandRIDelawareDE

7. Daycare Daycare Daycare

According to women are having to leave their jobs in droves because they are unable to find or afford adequate child care. 

What happens when one spouse passes away and the need for childcare increases? How will that affect the family financially.

How will this new dynamic of a single income family affect your loved ones, will your spouse have to quit their job to take care of the kids?

A strong life insurance policy would prevent this from happeneing.

8. Peace of mind

There is nothing better than knowing that if something happens to me that my husband will be perfectly fine.

While I worry about how devastated he would be, I have a complete peace of mind that he won't have to worry about any financial situations.

When we have kids, we both will have the peace of mind knowing that if anything happened to either of us, our kids will be taken care of.

9. Unexpected Critical illness

This year my second grandmother (whom I called Nana), passed away from Alzheimers.

It was of course, unexpected and there wasn't anything we could do.

My Grandfather is a retired master jeweler so they were fine financially.

However, I can't imagine people going through this with no financial means of assisting their loved one with this terrifying disease. 

There is something called living benefit life insurance that allows the life insurance company to pay out on the policy while the insured is still living.

If they are diagnosed with a critical, chronic or terminal illness the companies can pay out up to 75% of the policy.  

Another reason why life insurance is essential.

10. Cancer is Very Real

My first grandmother passed away several years ago from Ovarian Cancer, we all know about cancer and most of us have been affected by it directly.

It would be foolish to think that it "can't happen to me" because it can happen to anyone.

Cancer isn't racist, sexist, homophobic, ageist, or any other thing you can think of.

We should all have a small policy simply because of the risk of cancer.

11. It Can Help You Save

You might have never heard of this but there is a policy called the Return of Premium Term Life Insurance policy.

These policies will return all the premiums you pay into it if you outlive the term.

If you pass away before the term ends, the death benefit will pay out to the beneficiaries.

I like to think of this as a savings account with a free life insurance policy attached.

Not only does it act as a savings vehicle but if you pass away your family is taken care of

Life Insurance Scams You Should Avoid:

Lying On Your Life Insurance Application

The worst thing you can do is lie on your life insurance application.  
I have found that people are willing to tell a small lie if they think it will save them a few bucks.

However, did you know that it is considered insurance fraud if you lie on your application?

On top of being illegal, this type of lie could have a devastating effect on your family if you were to pass away during the contestability period.

Life insurance companies have 2 years to contest any death.

So if they find out you passed away from a condition you didn't disclose during the application process, they can deny your claim.

Trying To Cover Someone Without Them Knowing

People often ask me if they can get life insurance on their parent or grandparent.

My answer is always Yes... However, they have to know you are purchasing this policy.

Could you imagine how much chaos the world would be in if you could just get life insurance on anyone?

To get life insurance on someone, they have to sign an application and agree to make you the beneficiary.

It is illegal to sign a life insurance application for someone else, especially when they don't know it is happening.


No Exam Life Insurance made easy.

Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us. 

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get no exam life insurance coverage within minutes of getting your quotes and applying.

Do Life Insurance Agents Scam People?

Unfortunately, there are some bad apples out there that will and have scammed customers.  

Most of the time, the customer will blame the insurance company and not the agent, so the company gets the bad rap and not the agent.

But a majority of the headaches will come from your interactions with your independent agent if a scam is involved.

To make sure an agent isn’t scamming you, there are several things you can do:

  • Check the department of insurance for their license
  • Never Make A Payment Out To Them or Their company
  • Don’t Let Them Pay Your First Months Premium
  • Contact The Insurance Company Directly To Confirm The Agent
  • Read the AM Best Rating Of The Insurance Company They Are Offering
  • Check For Online Reviews Of The Insurance Company - Like Our Haven Life Insurance Review

While on average you can trust your insurance agent 100%, you always want to verify that they indeed can be trusted.

Taking Action

Life insurance is not a scam, but it is easy to use that as an excuse for why you don’t have any.

Hopefully, I have helped you see that life insurance will be one of the best things you can do for your families financial future.

We won’t be around when it pays out, we should be purchasing it for our family, so click that button above and get some quotes and quick coverage.