Insurance Refund Scam Alert: How Fraudsters Trap Policyholders With Lapsed Policy Refund Claims

What if you suddenly receive a call about an unexpected financial gain? Would you accept it without question? If your answer is "yes," you should be cautious. A new scam is doing the rounds in which fraudsters pose as insurance company officials and lure people with promises of a payout from a "forgotten" insurance policy.

According to people familiar with the insurance sector, fraudsters are increasingly impersonating insurance company employees, grievance redressal officials, and even sector regulators. They contact individuals and remind them of insurance policies taken many years ago, claiming that although the policy has lapsed, the accumulated premiums have grown into a large sum. Such fraudulent calls have emerged as one of the fastest-growing financial scams targeting insurance policyholders across India.

To transfer the so-called funds, the fraudsters demand fake "processing charges," tax clearance fees, or insist that the policyholder purchase a new insurance policy. Once the victim makes a payment to their account, the caller disappears, and the promised payout never arrives.

Why These Fake Insurance Calls Seem Convincing?

According to insurance industry professionals, these callers sound confident, professional, and well prepared. They often have details such as the policyholder's name, the insurer's name, the year the policy began, and even the premium amount. This makes it easier for them to convince people that the call is genuine.

Experts believe scammers may have accessed such information through old databases, compromised customer records, or past data breaches. They use official-sounding terminology and present themselves as insiders with access to confidential systems, which further builds trust.
Another common tactic is creating urgency. The callers claim the refund window is about to close and insist that payment must be made immediately. This pressure leaves policyholders with little time to verify the claim with their insurer.

How To Detect Insurance Scam Calls?

One crucial point to remember is that no individual associated with the Bima Lokpal (Insurance Ombudsman) or any government body will call you about old insurance policies. Legitimate insurers or regulators do not call policyholders out of the blue to promise refunds or ask them to buy a new policy to release funds.

What Actually Happens To Lapsed Policies?

If you genuinely had an insurance policy that lapsed years ago, the outcome depends on the type of policy. In traditional plans such as endowment or money-back policies, if the policy lapses before it builds any surrender value, the premiums are usually forfeited. In such cases, there is no amount to be refunded.

In the case of Unit Linked Insurance Plans (ULIPs), the fund value does not vanish. When a ULIP lapses, the accumulated amount is transferred to a discontinuation fund. This money can be withdrawn only after five years and only after applicable charges are deducted.

If you want to know the actual status of an old insurance policy, the safest approach is to contact the insurance company directly using official contact details.