Insurance comes in all shapes, sizes, prices, and coverages. Policy providers use complex mathematical formulas to determine how likely various accidents are likely to happen, charge everyone seeking a certain type of policy monthly premiums based on how statistically likely they are to get in those accidents, then – hopefully – pay out less money than the total worth of all customers’ premiums.

Health and vehicle insurance are the two most popular types of insurance in the United States. Life insurance follows closely after as the third-most popular insurance coverage in the country.

What is life insurance?

Put simply, life insurance is an agreement between a policyholder – the person whose name is on the agreement – and an insurance provider. Whenever the policyholder dies, beneficiaries named by the policyholder ahead of time receive money.

Life insurance is unique in that it only pays awards upon someone’s death. Check out these popular scams and make sure to stay away from them – education is the best protection against them.

The age-old faked death

Policies only pay out upon the policyholder’s death. As such, scammers often try to fake deaths of both real and imaginary people.

Some fraudsters will take out a policy on a nonexistent person, forge a death certificate, then attempt to receive a payout. Others will try to make the policyholder “disappear” to earn a hefty payday – neither of them works very often.

Don’t buy into expensive annuities

Sleazy agents will sometimes try to get clients to purchase expensive annuities that they can’t make payments on. These monthly payments are very hefty in comparison to the individual’s actual level of wealth and income. The goal of these sleazeball life insurance agents is to get the policyholder to be unable to reasonably pay on an annuity, resulting in the forfeiture of all the money poured into the annuity.

This method is called twisting.

Churning is another popular type of scam perpetrated by dishonest sleazeballs

Annuities are agreements through which a client pays a large amount up front, waits several years, then receives more money in return. They’re essentially investments, though they’re not actually investments – they’re life insurance policies.

Churning involves agents who try to get seniors with active annuities to purchase new annuities, effectively replacing the old ones and making it nearly impossible for them to get money from the new annuities. Agents take a large cash bonus for signing seniors up for these annuities.