The phone rings and a confident voice on the other end claims that you have an old insurance policy—long forgotten—that has now grown into a sizeable payout. The caller reassures you that only a “small procedural step” remains before the money is credited directly to your bank account. The lure of unexpected financial gain is powerful. But consumer experts warn that this is among the fastest-growing financial scams targeting insurance policyholders across India.
According to professionals familiar with the insurance sector, fraudsters are increasingly posing as insurance company staff, grievance redress officials, and even sector regulators to contact unsuspecting customers. Under the guise of releasing refunds, they demand fake “processing charges”, tax clearances, or insist on the purchase of a new policy. Once money is transferred, the callers vanish, and the promised refund never materialises.
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There is a simple rule that policyholders must remember: no insurance company or government-linked body initiates phone calls offering unclaimed insurance money. Insurance grievance mechanisms are activated only when a customer approaches them after a dispute with an insurer. They do not track old policies, calculate payouts, or make unsolicited refund calls.
Any unexpected call promising money from an old insurance policy should be treated as fraud.
Why these calls sound so convincing
What makes this scam particularly dangerous is the level of preparation involved. In many cases, callers already know the policyholder’s full name, the insurance company involved, the approximate year the policy was issued, and even the premium amount paid.
Such information is typically sourced from old databases, compromised customer records, or past data breaches, making the interaction appear legitimate. Callers use professional language, official-sounding terminology, and project themselves as insiders with access to confidential systems.
Another commonly used tactic is urgency. Victims are told that the refund window is closing or that regulatory deadlines require immediate action. The intention is clear—to deny policyholders the time needed to independently verify the claim with the insurer.
Experts note that urgency combined with secrecy in financial matters is almost always a red flag.
The biggest giveaway: upfront payment demands
There is no legitimate insurance process that requires customers to pay fees or buy a new policy to release money from an old one. Fraudsters often ask for processing fees, documentation charges, tax payments, or temporary transfers that are promised to be refunded later.
In several cases, policyholders are persuaded to purchase a fresh policy, allegedly to “link” it with the old refund. Once the payment is made, all communication ceases.
Consumers are advised to treat any demand for upfront payment linked to an insurance refund as a guaranteed scam.
How lapsed policies actually work
The reality of lapsed insurance policies is far less dramatic than what these calls suggest. Traditional products such as endowment or money-back policies usually forfeit premiums if they lapse before acquiring a surrender value. In such situations, no refund is payable.
Unit-linked insurance plans (ULIPs) operate differently. When premium payments stop, the accumulated fund value does not disappear but is transferred to a discontinuance fund. This amount can typically be withdrawn after five years, subject to applicable charges. Crucially, even in ULIPs, small premiums do not suddenly multiply into large payouts.
There is no scenario in which a forgotten low-value policy turns into a major financial windfall without the policyholder’s knowledge.
What policyholders should do
Anyone unsure about the status of an old policy should contact the insurance company directly using details available on the official website or policy documents. Queries should never be routed through phone numbers provided during unsolicited calls.
Policyholders must avoid sharing documents, one-time passwords, bank details, or identification information over the phone. Financial decisions should never be taken under pressure or within artificial time limits imposed by unknown callers.
Experts emphasise that awareness remains the strongest line of defence. If an offer sounds too good to be true, it almost certainly is.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
