Bima Lokpal called and asked me to claim a refund for a lapsed insurance policy. Is this fraud?

I had taken a life insurance policy with an insurer in 2009 and paid a premium of ₹50,000. The policy later lapsed. Recently, I received a call from someone claiming to be from “Bima Lokpal,” stating that the government is returning unclaimed insurance money. I was told that my ₹50,000 has grown to ₹5 lakh and can be refunded, but only if I first buy a new policy. They said the amount will be transferred to the new policy and refunded to me within 30 days. Is this true?

This is one of the most common types of insurance fraud we encounter today, and it is good that you paused and asked before making any payment.

In such cases, fraudsters somehow gain access to old policy data and speak with a great deal of confidence. They often know the insurer’s name, the year of purchase, and the premium paid. This creates a false sense of trust and lends the conversation a semblance of legitimacy. Many policyholders fall into this trap because the caller appears well-informed and authoritative.

No government organization, regulator, or the Bima Lokpal calls policyholders to refund money. Any claim that the “government wants to return your insurance money” is incorrect. Government bodies do not call customers, do not route refunds through new policies, and do not ask for payments to release funds.

If there is any information to be checked, it is always available on the official website of the insurer or regulator, which you can access yourself. There is no need for an intermediary to ‘facilitate’ the process.

Red flags

Another major red flag in your case is the request to buy a new policy so that the alleged amount can be transferred and refunded later. No genuine insurance or refund process operates in this manner. Once money is paid for a new policy, it is usually irrecoverable, and the promised refund never arrives.

It is also important to understand how lapsed policies actually work. In non-Unit Linked Insurance Plan (ULIP) policies (such as traditional endowment or money-back plans), if the policy lapses before acquiring a surrender value, the money is generally lost. In ULIP policies, when a policy lapses, the existing fund value is moved to a discontinuation fund. This amount can be withdrawn only after five years, after deducting applicable charges.

In neither case does the money magically grow from ₹50,000 to ₹5 lakh. Such exaggerated figures are purely used to lure policyholders into making quick decisions.

The safest and only correct step in such situations is to directly contact the insurance company through its official customer care channels and check the policy's status, including whether any fund value exists and whether any payments are due.

Never rely on unsolicited calls, never share one-time passwords (OTPs) or documents, and never make payments based on promises of refunds.

This is a fraudulent call, and you did the right thing by questioning it. Always verify directly with the insurer or through official websites. In insurance, urgency and guaranteed windfalls are almost always signs of a scam.

Shilpa Arora, co-founder & COO, Insurance Samadhan