How to prevent old insurance policy scam

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Over a few months, a new form of an insurance scam has come up where fraudsters call regarding an old insurance policy and seek other personal information. Such fraudulent calls appeal to our greed and personal information related to money which we end up exposing to the scamsters.

What should we do in order to protect ourselves from such fraud calls? Money9’s Vivek Law speaks to a renowned financial planner Surya Bhatia on this new form of scam and what should one do?

What is the nature of this scam?

Their modus operandi is that a call is received from an imposter who poses as an insurance agent calling from different specs of insurance companies. They use the names of various insurance companies like Birla, Max, LIC, etc. The fraudsters mention any old insurance policy typically from 2012 or 2013, although the year may change. As a good agent, they tell that you have missed paying the premium and the company has asked to call everyone up especially during the covid times to reinstate the policy which means at that time the premium period was typically for three years and now they ask you to pay the premium for two years.

Investors tend to pay the money because the policy is close to its end and they believe that they will get back the money in the next 2-3 years. Because the policy is not existing in the record, the investors believe that either they have bought the policy or their agent would have sold the policy or the bank would have sold it.

Since the time frame is large, investors generally don’t remember and because it involves money coming, it becomes convincing and you tend to fall into the trap. Generally, scamsters have all the information including fake policy numbers that it becomes difficult to identify. Therefore, no one should share any information with anyone unknown.

 The larger issue is the fact that how little we keep a sense of our financial records. How can someone prevent this from happening?

Firstly, never share your personal information with anyone. Such fraudsters use basic instinct of greed so it is important to be a little more careful in money matters.

Secondly, if any agent comes and tells you about your insurance policy and tries to seek more information, be careful. There is no need to share data points with anyone. You can always check your records yourself if you have taken the charge of your investments. If not, check with your advisor. These scamsters will force you to pay the amount right away so that you do not get any time to think.

My advice would be that we are not in a good world where someone would come and tell you the money they owe. Fraud calls are too good to be true so do your homework well. In case you believe that there can be a policy issued by you, it is better to keep your financial records in order.