Insurance Refund Scam: Experts Warn Against Fake Bima Lokpal Calls- All You Need To Know

Have you recently received a call from an individual mentioning their ‘Bima Lokpal’ allegiance, asking you to claim a refund after your insurance policy lapsed? Don’t act on it. It’s a scam, explained

Shilpa Arora, co-founder & COO, Insurance Samadhan, in an interesting case study for The Mint.

The business expert highlighted the scam through a detailed response given to an individual who mentioned they received a call from ‘Bima Lokpal’ regarding a life insurance policy obtained in 2009, for which a premium of Rs 50,000 had been paid before it lapsed. The individual was asked to either pay a sum to initiate the refunds or take an alternate policy.

Trust Leads You To Trap

Calling it one of the most common forms of “insurance fraud”, Arora alerted the policyholders around India not to make any payments to such individuals. Despite banks and other financial entities forging a secure network for their customers, these fraudsters are somehow still able to access old policy data and the contact details of policyholders.

These mischievous individuals are trained to speak with great confidence and authority. Since they have already accessed the insurer’s name, the year of purchase and the premium paid, they can gain the trust of such policyholders through conversations. Since the overall procedure seems legitimate and beneficial to the call receiver, they fall right into the trap.

Why This Is A Scam

Policyholders around India should know that no government organisation, regulator, or the Bima Lokpal calls policyholders to refund money. Any individual assuring you that the refunds can be accessed on a lapsed insurance policy is fooling you. Neither do insurance ombudsmen for government bodies call the customers and signal policy refunds, nor do they ask for payments to release such refunds. Any financial process of this kind needs no intermediary. Individuals can access all the necessary information through the official website of the insurer or regulator.

In the call that the above person received, the fraudster suggested purchasing another policy so that the alleged amount could be transferred and refunded later. Any responsible policyholder should be able to pick out the red flag right there, insisted the Insurance Samadhan co-founder. Arora stressed that no genuine insurance company would undergo the refunding process in this manner.

When an individual signs up for a non-Unit Linked Insurance Plan (ULIP) policy, such as the regular endowment or money-back scheme, the money is usually lost if the policy lapses before acquiring a surrender value. As per ULIP regulations, the existing fund value gets transferred to a discontinuation fund when the policy lapses. This amount can be withdrawn only after five years, with certain deductions due to the charges applied.