17 Life Insurance Red Flags

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17 Life Insurance Red Flags

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17 Life Insurance Red Flags

Choosing the right life insurance policy can be a complex task, but being aware of potential red flags is crucial. This article presents key insights from industry experts to help consumers make informed decisions. By understanding these warning signs, readers can protect themselves from common pitfalls in the life insurance market.

  • Beware of Pressure to Buy Immediately
  • Take Time to Understand Policy Details
  • Watch for Post-Exam Claim Denial Tactics
  • Demand Transparent Performance Data from Insurers
  • Question Agents Pushing High-Commission Products
  • Verify Agent’s Background Check Processes
  • Ask About Agent Compensation and Representation
  • Document All Application Disclosures Thoroughly
  • Request Written List of Policy Exclusions
  • Evaluate Necessity of Offered Policy Riders
  • Discuss Health Impacts on Premiums Upfront
  • Insist on Detailed Multi-Year Policy Illustration
  • Be Cautious of Unrealistic Return Promises
  • Demand Transparency on Fees and Commissions
  • Seek Clear Explanations of Policy Terms
  • Require Written Documentation of Policy Specifics
  • Avoid Agents Glossing Over Policy Illustrations

Beware of Pressure to Buy Immediately

When I first got licensed and started talking to everyday folks about life insurance, one red flag kept popping up: pressure to buy right away. If an agent pushes you to make a decision on the spot, that’s a big warning sign.

Life insurance isn’t a pair of sneakers—it’s a long-term commitment that protects the people you love most. You deserve space to understand what you’re buying. When someone rushes you, it’s usually because they don’t want you to notice something—whether it’s a sky-high premium or hidden exclusions buried in the policy.

I’ve always told clients: a good agent will walk with you, not sprint ahead of you. Taking a pause can save you from years of regret. Being aware of that one pressure tactic has helped a lot of people avoid overpriced or unsuitable policies—and kept trust at the heart of the process.

Nathan WellerNathan Weller
Head of Content and Licensed Insurance Agent, Insuranks


Take Time to Understand Policy Details

A key red flag to watch for when researching life insurance companies or interacting with agents is the pressure to make an immediate decision. Some agents will push for a quick sale, citing limited-time offers or implying that a decision must be made on the spot. This pressure can cloud your judgment and lead to hasty decisions without fully understanding the terms of the policy. A legitimate agent should encourage careful consideration, answer questions thoroughly, and allow you time to review the details before making a commitment.

Being aware of this tactic can protect potential policyholders by ensuring they do not rush into a policy that may not be suitable for their needs. It’s important to take the time to compare different options, ask for clarifications on coverage, and ensure the policy aligns with both short-term and long-term financial goals. Rushing through the decision-making process can often lead to regret or financial strain, so maintaining control of the timeline is a crucial part of making a well-informed choice.

Steve CaseSteve Case
Financial & Insurance Consultant, Insurance Hero


Watch for Post-Exam Claim Denial Tactics

As someone who has spent over 17 years fighting insurance companies after they deny legitimate claims, the biggest red flag I see is when life insurance companies require extensive medical exams but then use that same medical information to find reasons to deny payouts later. I’ve had clients whose families were hit with claim denials because the insurer found a minor medical detail that wasn’t “properly disclosed” during the application process.

Here’s what happens: The insurance company’s medical exam finds something like slightly elevated blood pressure or an old knee injury you forgot to mention. You get approved and pay premiums for years. Then when you die, they use that same information to claim you “misrepresented” your health and try to void the entire policy.

I had a case where a client’s widow was denied a $500,000 payout because her husband didn’t mention a brief bout with anxiety from 15 years earlier that showed up in his medical records. The insurance company had access to all his medical information during underwriting but approved him anyway, then used it against his family when it came time to pay.

The protection is simple: during any medical exam or health questionnaire, specifically ask the agent to document every health issue they find and confirm in writing that approval means acceptance of your complete medical history. Most shady companies will back down when you ask for this documentation upfront.

Russell NicoletRussell Nicolet
President and Trial Attorney, Nicolet Law


Demand Transparent Performance Data from Insurers

At Thrive, I’ve noticed a critical red flag that mirrors what I see in healthcare partnerships: agents who won’t provide transparent data about claim denial rates or payout timelines. When we evaluate insurance partners for our patients, companies that dodge specific performance metrics usually have something to hide.

I learned this lesson when vetting coverage options for our intensive outpatient programs. One insurer’s agent kept deflecting questions about their behavioral health claim approval rates, only to find later they had a 40% higher denial rate than the industry standard. Our patients faced unnecessary delays in accessing care.

The protection strategy I use now: ask for their claims data in writing, specifically denial rates for your coverage type and average payout timeframes. Legitimate companies will provide this information readily because they’re proud of their performance metrics.

At Lifebit, we apply this same transparency principle when partnering with health systems—any organization that won’t share concrete performance data typically creates problems down the road. Trust the companies that lead with numbers, not just promises.

Nate RaineNate Raine
CEO, Thrive


Question Agents Pushing High-Commission Products

The major red flag I’ve learned to keep an eye out for in the life insurance world is an agent who steers you hard toward products like whole life, variable universal life, or expensive annuities without ever delving deeply into your specific financial goals, family situation, or risk tolerance.

In my view, true professionals are financial doctors who diagnose before prescribing. However, when a person sidesteps the initial conversation and goes directly to pitching high-commission products, it may suggest that their interests are more about pocketing a large commission than safeguarding your financial future.

For example, variable universal life policies typically carry fees of more than 3-4% a year. Over a 20-year time frame, that can erode more than half of your potential gains compared with low-cost alternatives.

Knowing this can help prospective customers maintain control of the conversation, as well as prevent them from becoming trapped in high-cost policies that don’t work for them. I have my own methodology, which involves posing questions to the agent: “How are you paid for this recommendation?” or “How much will this cost me in percentage terms annually?”

In the end, a good agent should inform you, not market to you, as insurance done right can represent a key financial backstop, not an overpriced anchor dragging down your wallet.

Aleksa MarjanovicAleksa Marjanovic
Founder & Marketing Director, Eternal Urns


Verify Agent’s Background Check Processes

After conducting hundreds of security assessments across 70 countries, I’ve seen a red flag that most people miss: life insurance agents who refuse to provide detailed written documentation about their background verification process for new policies.

During a security assessment for a pharmaceutical client, we found their executives were targeted by fraudulent insurance schemes where fake agents collected personal financial information under the guise of “policy applications.” The legitimate companies had robust identity verification protocols they were happy to explain, while the fraudulent ones became evasive when pressed for documentation.

I always tell clients to ask any insurance agent: “What specific background checks and verification processes does your company use before issuing policies?” Legitimate agents will walk you through their company’s fraud prevention measures, identity verification systems, and compliance protocols without hesitation.

The sketchy ones will deflect with vague answers about “standard procedures” or rush you toward signing. At Vertriax, we’ve learned that any financial service provider who won’t transparently explain their security processes is hiding something – and that’s exactly when you should walk away.

Stewart SmithStewart Smith
President & CEO, Vertriax


Ask About Agent Compensation and Representation

After 30+ years in business development across healthcare and financial services, the biggest red flag I watch for is agents who won’t clearly explain how they get paid or which companies they represent. I’ve seen too many situations where agents push specific policies not because they’re best for the customer, but because they offer the highest commissions.

At Complete Care Medical, we’ve built our reputation on transparency—we tell customers exactly how insurance billing works and what their out-of-pocket costs will be upfront. When we expanded from 2 employees to serving 50,000+ customers, it was because people trusted our straightforward approach over competitors who buried details in fine print.

The protection comes from asking direct questions: “How much commission do you make on this policy?” and “Do you represent other companies with similar products?” Legitimate agents will answer honestly. I learned this lesson early in my career when I saw clients get burned by agents who presented themselves as independent but only sold products from one company.

If an agent gets defensive about compensation or tries to redirect the conversation, walk away. Real professionals understand that informed customers make better long-term clients.

JP Monteverde IIIJP Monteverde III
President & CEO, Complete Care Medical


Document All Application Disclosures Thoroughly

Having survived a catastrophic brain injury myself and now representing families dealing with life insurance bad faith cases, the biggest red flag I see is when companies immediately claim “material misrepresentation” on applications after a death occurs. They’ll comb through every detail looking for any minor inconsistency to deny valid claims.

I’ve handled cases where insurers denied benefits, claiming the deceased “lied” about a prescription medication they took years earlier, even when it had zero connection to their cause of death. These companies bank on grieving families being too overwhelmed to fight back during their most vulnerable time.

The protection comes from keeping detailed records of everything you disclose during the application process. Take photos of your completed application before submitting it, and if an agent fills it out for you, review every single line before signing.

Most importantly, if your claim gets denied for “misrepresentation,” don’t accept it as final. Having been on both sides of traumatic situations, I know these denials are often just intimidation tactics designed to avoid paying legitimate claims to families who desperately need that financial security.

Keith FuicelliKeith Fuicelli
Managing Partner, Fuicelli & Lee Injury Lawyers


Request Written List of Policy Exclusions

After running RevIVe Mobile IV and working with healthcare professionals daily, the biggest red flag I watch for is agents who avoid discussing exclusions or waiting periods upfront. In our business, we see people who thought they had comprehensive coverage, only to find major gaps when they needed it most.

I had a client who bought life insurance thinking it covered everything, but the agent never mentioned the two-year suicide clause or contestability period. When his family filed a claim 18 months later after his accidental death, the insurance company delayed payment for months while investigating, causing massive financial stress during their grief.

The protection comes from demanding a complete list of exclusions in writing before you sign anything. I learned this from watching our medical malpractice insurance process – legitimate insurers will gladly provide detailed exclusion lists upfront. If an agent gets defensive or vague about what isn’t covered, that’s your cue to walk away.

Always ask specifically: “What situations would prevent my family from receiving the full payout?” Their response tells you everything about whether they’re trustworthy.

Kylee HeckKylee Heck
Owner, RevIVe Mobile IV


Evaluate Necessity of Offered Policy Riders

When dealing with life insurance companies or their agents, it’s important to be cautious about how they handle policy riders. These are additional benefits that can be added to a basic insurance policy, significantly impacting both cost and coverage. Some agents may push riders that are unnecessary for your situation, presenting them as essential to increase the premium and their commission. This practice can result in you paying more than necessary without receiving tangible benefits.

Being aware of this practice can protect potential policyholders by encouraging them to ask detailed questions about each rider’s purpose and necessity. It’s crucial to understand if the added benefits align with your actual needs. This awareness can also help you resist upselling that doesn’t serve your interests. Always thoroughly compare what each rider offers against your personal or family needs and evaluate whether those extra costs are justified. By doing so, you empower yourself to make more informed decisions, ensuring you only pay for what genuinely benefits you and avoid unnecessary expenses.

Shannon Smith O'ConnellShannon Smith O’Connell
Operations Director (Sales & Team Development), Reclaim247


Discuss Health Impacts on Premiums Upfront

As someone who has built a veteran-owned pain management practice and dealt with various insurance companies daily, I’ve noticed a major red flag that most people miss: agents who won’t discuss upfront how chronic health conditions affect your premiums.

I’ve seen this play out repeatedly with my chronic pain patients. One veteran patient of mine was sold a policy without the agent explaining how his service-connected back injury would impact rates. Six months later, his premiums doubled after the medical exam, and he was locked into a policy he couldn’t afford.

The protection comes from demanding full medical disclosure discussions before any paperwork. I always tell my patients to ask agents directly: “How will my specific health conditions affect my rates over the next 10 years?” Legitimate agents will walk through medical underwriting honestly rather than minimizing health impacts to close the sale.

From managing a clinic that accepts everything from Medicaid to private insurance, I’ve learned that transparent communication about limitations and costs upfront saves everyone headaches later. The same principle applies to life insurance—if they’re evasive about how your health affects pricing, find someone else.

Jeff Toups CRNAJeff Toups CRNA
Owner & Founder, Pain Specialists Of Brighton


Insist on Detailed Multi-Year Policy Illustration

I once sat through a pitch where the agent glossed over the policy’s “illustration,” telling me I’d “get the details later” once I signed up. That reluctance to show me the full numbers upfront was my biggest red flag. In that moment, I realized any agent who can’t—or won’t—lay out exactly how premiums, fees, and benefits play out over time is hiding potential surprises that can sink your coverage (and your budget) down the road.

To protect yourself, always request a detailed, multi-year policy illustration before committing. If the agent hesitates, claims it’s “too complicated,” or leaves it until after you’ve applied, walk away. Having that concrete projection in hand lets you compare apples to apples, so you won’t be blindsided by escalating costs or a policy that underperforms your needs. That unadorned insistence upfront saved me from a plan with hidden expenses and gave me the confidence that my coverage truly aligned with my family’s long-term goals.

Jay VincentJay Vincent
Owner, Smart Solutions Pest Control


Be Cautious of Unrealistic Return Promises

If an insurance carrier or agent is overpromising more returns or guarantees, that should stop you in your tracks. Life insurance is not an investment vehicle that is supposed to yield outrageous amounts of money. So when a discussion begins with the conversation about “guaranteed” returns or they are selling a way to become rich, that’s a sign that either they don’t understand the products, or they are being dishonest.

I have seen cases where some were promised double-digit returns in the form of an indexed universal life insurance or whole life policies, only to end up with much less than they had anticipated due to fees, surrender charges, and actual credited interest. This is something that people should know because it will keep them from locking into long-term contracts that are hard to get out of.

Brian Clark BSN, MSNABrian Clark BSN, MSNA
Founder and CEO / Certified Registered Nurse Anesthetist, United Medical Education


Demand Transparency on Fees and Commissions

When a life insurance agent attempts to sell a policy without providing details of how the commissions and fees impact the cash value or premiums for the policy, that is a red flag. When someone dodges that part of the conversation or gives you a rehearsed line like “the company covers all that,” it tells me they are more interested in closing a sale than making sure the policy actually works for the person paying into it.

I have seen people unknowingly commit to $400 per month universal life policies thinking they were building cash value fast, only to find out years later that the bulk of their money went to fees in the first few years. That lack of transparency can lead to disappointment and, in some cases, people let policies lapse without even recovering what they paid in. You protect yourself by asking directly for an illustration that includes every charge and commission year by year. If they avoid it, walk away. A legitimate agent will explain exactly how your money is used from day one. If they cannot, they should not be selling it.

Ali HassanAli Hassan
Founder / Construction & Project Consultant, Rabbit Roofing


Seek Clear Explanations of Policy Terms

One red flag to watch for is a lack of transparency about policy fees or exclusions. If a company or agent avoids giving clear answers about what’s not covered, or buries important details in fine print, that’s a problem. At Insurancy, we’ve seen how unclear terms can lead to major surprises down the line—like denied claims or unexpected premium hikes.

Being aware of this helps policyholders protect themselves by asking direct questions and insisting on full clarity before signing anything. If an agent can’t explain a policy in plain language, they probably shouldn’t be selling it.

Brian GreenbergBrian Greenberg
Founder, Insurancy


Require Written Documentation of Policy Specifics

A lack of transparency regarding the terms and costs of policies is one red flag to look out for when researching life insurance companies or agents. Certain agents may provide unclear information about coverage and focus on the advantages without explaining the exclusions, premiums, or renewal rates in detail. For example, a policy may seem cheap initially, but in reality, it may have high and increasing premiums that rise after several years, potentially surprising policyholders.

Awareness has the potential to protect prospective policyholders by encouraging them to ask specific questions about the fine print. Knowing all the costs involved and the long-term expenses of a policy will enable people to make better choices. It also helps avoid future surprises, as they won’t be committed to a policy that may not suit them in the future or become too expensive to afford.

Rami SneinehRami Sneineh
Vice President / Licensed Insurance Producer, Insurance Navy


Avoid Agents Glossing Over Policy Illustrations

When a life insurance agent avoids putting things in writing, for me that is a red flag. When they refer to all their promises given verbally and are hesitant to send you an email copy of the specifics of the policy, the guarantees of premiums, or the exclusions, you need to stop. Such an attitude may mean that they are working under pressure or using fallacious language that cannot be proven later. I have witnessed the same among homeowners in roofing jobs whereby verbal promises are long lost when paperwork appears. You should have upfront transparency.

Putting things on paper will protect you against bait and switch tactics. In case of a sudden price increase in the second year or benefits being reduced due to fine print, the agent can produce a signed document and claim you did not comprehend. Seeing the terms in writing before signing is a good way to have a review with a lawyer or someone you trust. I will never advise you to sign anything without clear documentation of what you are purchasing. It is no different from the standard I would expect in any other field, whether it’s getting a new roof or ensuring the financial well-being of your family. If they are unwilling to put it in writing, quit. That is a company you do not want to involve yourself with on a long-term basis.

Todd StephensonTodd Stephenson
Co-Founder, Roof Quotes


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