5-common-life-insurance-scams

5 Common Life Insurance Scams: You Should Know

Covers common life insurance scams in India and explains how policyholders can identify and avoid them.

Written by : Knowledge Centre Team

2025-12-17

1004 Views

7 minutes read

Exit Pop Up

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
Annual Income is required
Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

One of the biggest reasons why these life insurance policy scams happen time and again is because of the huge amount of money involved in it. Money is the key driving factor for any type of fraud, and thus life insurance fraud is one of the most common types to occur..

Another reason is that people are not aware of much about the working of life insurance policies. Their unawareness is what makes them vulnerable to fraud agents. Read more to understand what scams you need to be aware of to successfully claim insurance and protect yourself and your loved ones.

Key Takeaways


  • Life insurance fraud occurs due to ignorance and involves large sums of money, and hence it is a profitable venture for fraudsters.
  • The most prevalent scams include identity theft, bogus companies, churning policies, claims fraud, and policyholders' misrepresentation. 
  • Always verify that the insurance providers are genuine, do not share personal details with unfamiliar callers or emails, and carefully read policy documents.
  • If you suspect fraud, immediately report it to your insurance company as well as the IRDAI to safeguard yourself.

Understanding Life Insurance Scams

Life insurance is an extremely useful financial tool that provides security to your loved ones when you are not present. But with its added worth, life insurance has also become a target of numerous scammers who exploit people's lack of knowledge. Knowing about the different types of life insurance frauds can help you recognise warning signs at an early stage and avoid financial loss. Here are some of the most common life insurance frauds to be aware of.

  1. Theft of Identity: This is the most popular fraud. Identity theft occurs when a person obtains your personal information from you wrongfully and uses it for economic gain. Over the years, this type of life insurance scam has significantly increased due to the internet. As technology has advanced, more and more work is being done by just talking over the phone or the internet. This enables the fraud to commit more crimes.
    Many scammers lure you via e-mails, phone calls, and SMS and will pose as agents and ask you for your personal information. They can contact you saying to buy a new policy or that your existing policy needs some changes. The information asked from you can include the following.
    • Credit card information
    • Aadhar card number
    • Bank account number

      All these are taken by the scammers as a form of information needed to apply for a life insurance policy but then are misused against you for money.  
  2. Fraudulent Company/Insurer: You may have heard in the news about companies that didn’t have any existence taking advantage of people. Yes, this thing does happen. Some high-profile fraudsters research well and set up their own fake insurance companies. These companies offer insurance at a cost that is considerably lower than what the other legitimate companies are offering so that customers are attracted to them. Also, they can offer services such as easy sign-up and quicker responses.
    All they require is for you to enter your card details. As soon as they start getting customers and when the customers enter their details to get insurance the fraudsters run away with the money. Always make sure of the company before buying.
    Not only the company but sometimes insurers are also frauds. They may present you papers that are real and take premiums from you as well, but they will not transfer them to the policy and instead keep it with themselves. This will lead to the company cancelling your policy even though you are paying premiums.
  3. Churning: Churning is the act of replacing the policy which is already in force with a new policy by the agent to earn more commission. This is also referred to as ‘Twisting’.

    How does Churning Work?
    In churning, an insurance agent will try to replace your existing policy with a new policy at a price that is either the same or a bit higher. They will try to do this without involving you as the policy structure is somewhat the same. This is done so that the agent can get an extra commission for the new policy he replaced with your existing one.
    Churning to add to your commission is illegal and is a big fraud in India as well as many other countries. Agents must take the customer’s consent before making any alteration, modification to the policy.
  4. Claims Fraud: You must have seen in many movies how people orchestrate their or even their loved one’s death to get hold of the insurance money. While this happens in real life as well.

    Faking or staging death to claim the insurance money is what claims fraud is all about. Many people fake their death or have their family members claim the life insurance policy death benefit. Fraudsters fake their death and disappear and return after some years.

    Some famous life insurance fraud examples include one of the British ministers, John Stonehouse. The minister went missing from Miami and was later found in Australia with a different identity. He was later found guilty and was imprisoned for 7 years for fraud.

    Some people even go to the extent of killing their loved ones to get the policy's benefit. Though it sounds gross, it does happen in some cases.

    These were the most common scams under life insurance. Staying aware of the working of life insurance policy and knowing what you are getting into is very important. Some steps you can take to stay safe from these scams are as follows.

    • Check that the company you buy insurance from is trusted. Do not buy from a source you have not heard about and cannot be easily found.
    • Do not reply to unsolicited e-mails. If you receive an e-mail or call asking about your information then do not provide them unless you are sure of it. Check with the company’s helpline if they require such information or not.
    • Always read the terms and conditions associated with a life insurance policy thoroughly. Keep checking on the policy regularly.
    • Check with the company immediately if the agent asks you to pay more premium without any reason.
    • Always disclose full information to the insurer. Do not indulge in any unscrupulous activity yourself either. Getting caught can lead to a heavy fine and even jail.
  1. False Information: This case happens not at the insurer’s end but at the insured's end. This happens when wrong information is entered into the application. This is also called misrepresentation or concealment of facts. This is one of the most common frauds.

    Before buying a life insurance policy, you are required to enter details, regarding your basic information. This may also involve your medical details. Hiding any important information or misrepresenting information counts as fraud in this case.

    For example, not disclosing some medical condition you may have. Another example is not disclosing you are a smoker, despite being one. To cater to these fraudulent companies, have medical tests. If the information doesn’t match the medicals, then the policy is rescinded immediately.

Secure Your Family’s Future with the Right Life Insurance Plan

Please enter correct name Please enter the Full name
Please enter valid mobile number Please enter Mobile Number
Please enter valid email Please enter Email
Consent is required

Enter OTP

An OTP has been sent to your mobile number

Didn’t receive OTP?

Application Status

Name

Date of Birth

Plan Name

Status

Unclaimed Amount of the Policyholder as on

Name of the policy holder

Policy Holder Name

Policy No.

Policy Number

Address of the Policyholder as per records

Address

Unclaimed Amount

Unclaimed Amount
Error

Sorry ! No records Found

.  Please use this ID for all future communications regarding this concern.

Request Registered

Thank You for submitting the response, will get back with you.

Importance of Reading Your Policy Document Thoroughly

While you need to be educated about various life insurance frauds, you need to pay attention to the policy document carefully before signing your name on the same. Various policyholders pay attention to premium rates and benefits emphasised by agents but are oblivious to fine print terms and conditions.

Your policy document contains critical information regarding:

  • Inclusions and Exclusions: What is covered in your policy and what is excluded?.
  • Policy Lapse Rules: Circumstances under which your policy could lapse.
  • Claim Process: How the precise process to file claims so you don't receive rejections for technical errors.
  • Free-look Period: This is the period during which you can cancel the policy without charge if you do not like the policy.

Reading and familiarising yourself with your policy document keeps you safe from future ambiguity. It saves you from unnecessary disputes and helps you and your family members to claim the policy benefits smoothly when needed.

Final Thoughts

Life insurance is an excellent means of securing your family's future, yet you must exercise caution against frauds and scams that can destroy this security. Being aware of the various forms of life insurance fraud, reporting them, and properly reading your policy documents can save you from being deceived by unscrupulous agents or bogus companies. At Canara HSBC Life Insurance, we pledge to be transparent and establish trust with you. We request you to remain aware, verify each fact prior to purchasing a policy, and get in touch with us if you want to clarify or need assistance. An educated policyholder is an empowered policyholder.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Recent Blogs

Who is an Insurance Agent? Role & Responsibilities Explained
18 Mar '26
102 Views
8 minute read
Learn who an insurance agent is, the role of an insurance agent, and how they help you choose the right insurance coverage and manage policies effectively.
Read More
Life Insurance
What is an Appointee in Life Insurance? Role & Meaning Explained
18 Mar '26
100 Views
8 minute read
Learn what an appointee in life insurance is, their role, and how they differ from an insurance nominee in managing policy claims for minor beneficiaries.
Read More
Life Insurance
What is Adverse Selection in Insurance? Meaning & Impact Explained
18 Mar '26
100 Views
6 minute read
Understand adverse selection in insurance, its impact on premiums, and how insurance risk assessment helps insurers manage high-risk policyholders effectively.
Read More
Life Insurance
No Smoking Day: How Smoking Affects Life Insurance and Financial Security?
11 Mar '26
324 Views
8 minute read
On No Smoking Day, learn how smoking impacts life insurance premiums, policy eligibility and long-term financial security for you and your family.
Read More
Life Insurance
Why Life Insurance for Women Is Crucial This International Women’s Day?
07 Mar '26
125 Views
7 minute read
On International Women’s Day 2026, understand why life insurance for women is essential to secure financial independence, protect families, and plan for long-term stability.
Read More
Life Insurance
What is the Principle of Contribution in Insurance?
05 Mar '26
1712 Views
7 minute read
Understand the principle of contribution in life insurance and how it applies to your policy. Explore insights from Canara HSBC Life Insurance to safeguard your financial future.
Read More
Life Insurance
5 Reasons Your Life Insurance Application May Be Rejected
27 Feb '26
2610 Views
7 minute read
Learn the top 5 reasons why a life insurance application may be declined, including medical history, incorrect details, financial risks, and underwriting concerns.
Read More
Life Insurance
Key Features and Benefits of Life Insurance in India
27 Feb '26
1416 Views
13 minute read
Understand the key features and benefits of life insurance in India, including financial protection, tax advantages, savings options, and long-term security.
Read More
Life Insurance
How Life Insurance Protects Families Facing Rare Health Conditions?
27 Feb '26
25 Views
8 minute read
Learn how life insurance helps families facing rare health conditions maintain financial stability through income protection and long-term planning support.
Read More
Life Insurance

Life Insurance - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover