TikTok, YouTube videos mislead viewers on life insurance, critics say

A recent routine service call led to a discussion on indexed universal life insurance between noted industry analyst Sheryl Moore and the visiting technician.

The man asked Moore – who founded Moore Market Intelligence and Wink, Inc. – if she has ever heard of “indexed permanent life insurance.” He had been listening to product pitches on TikTok.

The more the man talked the greater Moore’s annoyance became.

He described the plans for his life insurance investment: to “get rich,” take loans without paying interest and, finally, to secure his retirement income.

“I had to explain to him that what he saw about indexed life on social media was not reality,” Moore said in a recent LinkedIn post.

A hard-working single dad to a young daughter, the man had stumbled into a no man’s land where mostly unregulated financial information flows from a mix of dynamic personalities.

“He was a good kid, trying to do right by himself and his daughter, and he had been misled by Tik Tok videos on indexed life,” Moore said.

The proliferation of so-called “financial experts” using half-truths and polished scripts to peddle IUL on TikTok and YouTube is concerning to many in the industry. After all, the bad apples reflect poorly on everyone working hard and honestly to use life insurance to help families.

Social media influence

Studies show that young people have deeper financial insecurities than older generations. Data from the 2024 Insurance Barometer Study show that young adults report higher levels of financial concern than older generations about paying for medical expenses, supporting themselves if they are unable to work, and paying monthly bills.

Those younger generations are used to receiving news and information via social media.

Among those who use social media for financial information, LIMRA data show the top three social media sites for young adults to use are: Facebook: (67% millennials and 54% Gen Z) YouTube: (68% millennials and 62% Gen Z) and. Instagram: (54% millennials and 57% Gen Z).

While many advisors are using social channels to promote financial literacy, they are not the only ones. Popular TikTok and YouTube videos claim that IUL owners can borrow money with no interest costs, for example. These videos often omit salient facts like surrender charges.

Sara Grillo is a financial advisor marketing consultant focusing on transparancy and ethical behavior. She is an outspoken critic of some social media marketing of life insurance.

While most investors are too shrewd and conservative to fall for a life insurance strategy originating on TikTok, there is definitely an at-risk audience as well.

“There are certain people that are maybe not the most patient and are seeking rewards and are more vulnerable to be taken in this way,” Grillo said. “The kind of people that maybe are a little bit risk loving, and risk takers. They are the ones that need that gratification, they seek that immediate gratification.”

Recognize the script

Most of the questionable social media content follows a similar script, Grillo said. She broke down the typical video into four parts:

Knowledge drop. The narrator starts with a specific statement of deep knowledge, such as “401(k)s are created by 26 U.S. Code 401 Section 401(k) of the Internal Revenue Code of 1986.” And the stage is quickly set.

“A lot of times it's for them to appear a lot smarter than they actually are, but that's how they kind of gain the trust of the audience,” Grillo said.

Fearmonger. “They'll say, ‘Well, there was this one woman who was a nurse or something, and she invested her hard-earned money for 22 years in a 401(k), and then she lost it all when the market went down,’” Grillo said.

This statement no doubt reflects reality, she added, but is the result of not paying attention, or taking on too much risk, or an unfortunate timing of the market.

“It has nothing to do with just the 401(k), or with it being market instruments as opposed to insurance. People make this mistake with insurance as well. They lose large sums of money in those instruments as well,” Grillo explained. “In the fear-mongering section of the script, they always present an incomplete fact.”

Whopping claim. Next, the script calls for a misleading, or outright inaccurate, claim. A popular one is, “you can’t lose money on an IUL.”

“You can lose money in an IUL,” Grillo noted. “Your cash value can be reduced if there's a zero-market-return year, and you're getting the cost of insurance extracted from the cash value, your cash value is not going to be credited anything. At the same time, you're going to be having money withdrawn from the cash value of the policy. If you are taking withdrawals, then the actual cash value within the IUL policy will not be going up.”

Alternative option. Finally, the trap is ready to be sprung. The narrator will propose a scenario around an IUL or a variable universal life policy.

“They'll propose the solution without mentioning the ways that these products have similar downfalls,” Grillo said. “So, they'll propose the solution and they'll say something like, ‘Well, not many people know about this.’”

‘Blatant misinformation’

Stephen Kates is a certified financial planner with extensive experience in the industry. There needs to be better regulation of social media platforms, he said.

“These videos are, at best, sales materials that should be subject to oversight from employers and regulators,” Kates said. “At worst, they are blatant misinformation and puffery meant to attract consumers who don’t know better. Better oversight is necessary to eliminate bad information and lack of disclosure.”

Regulation of media claims generally falls under the Unfair Trade Practices Act, which covers “deceptive or misleading advertising.” Since it was created by the National Association of Insurance Commissioners in the 1940s, the act has been updated several times.

Likewise, the NAIC later adopted the Advertisements of Life Insurance and Annuities Model Regulation. It “establishes minimum standards and guidelines to ensure that all relevant information is disclosed truthfully and fully to the public in life insurance policy and annuity contract advertisements.”

The Federal Trade Commission also enforces truth-in-advertising laws to protect consumers from misleading or deceptive advertisements.

Recently, state insurance regulators launched an effort to combat the deceptive marketing of health insurance products. The Improper Marketing of Health Insurance Working Group came up with amendments to the Unfair Trade Practices model to give regulators more authority over misleading lead-generation Medicare ads.

Taking on the scammers

Grillo prefers that agents and advisors take on pushers of scammy social media advertising. She proposes a four-part strategy:

1. Confront the content provider. Since some life insurance and annuity products can be complicated, Grillo advises a good-faith approach. Assume the content provider made a genuine mistake and offer factual information to correct it.
2. Create rebuttal content. Alternative content can fill in the missing information and provide a contrast to the claims being made, Grillo explained.
3. Contact the social media platform. Content hosts are likely to remove truly egregious and misleading information about life insurance.
4. Contact regulators. The Securities and Exchange Commission has had some success fining advisor firms for misleading and inaccurate social media posts. But regulation continues to evolve, Grillo said, and regulators need to know what is happening.

“If every agent that saw one of these bogus videos got out there and started refuting claims like this directly, it would increase trust in the good agents, and it would decrease trust in the scammers,” Grillo said. “People either don't know how to do it, they don't want to do it or they don't want to be the one. But our silence is what's going to permit this to happen.”

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.