The Shocking story of – How LIC policy was surrendered using Forged Signature

POSTED BY Jagoinvestor ON December 16, 2013 COMMENTS (33)

Can someone else surrender your LIC policy and take the money ? I know you have never ever thought this can happen, because this looks so impossible, but I want to share an incident with you all which happened with Muthu (name changed), who is one of our jagoinvestor reader.

insurance fraud surrender

One day, Muthu came to know that 3 of his LIC policies were surrendered by someone else and the money was utilized. He came to know about this only when he got pre-closure letter from LIC for his 3rd policy. Below is the full sharing from Muthu

Hello All,

I was shocked to know that someone has used my identity (signature) to surrender my LIC policies and utilized that money for their benefits.

  • Firstly, my policy # 363934899 was forged and surrendered on 29.01.2013, for which LIC has issued cheque # 926895 dtd 29.01.2013 amounted Rs. 49795/- without my knowledge or consent.
  • Secondly, my policy # 363934900 was forged and surrendered on 29.01.2013, for which LIC has issued cheque # 926894 dtd 29.01.2013 amounted Rs 49795/- without my knowledge or consent.
  • Thirdly, my policy # 364340197 was forged and surrendered on 07.10.2013, for which LIC has issued cheque 959220 amounted to Rs 35645/- without my knowledge or consent.

I came to know about this when I received pre-closure letter from LIC after surrender of my third policy # 364340197. Immediately I raised written complaint to LIC about policies forgery on October 29, 2013. Further to my complaint, LIC recovered forged amount from the concern person and sent a covering letter along with the 4 cheques to me for the forged valve but not specifying the forged person name on the covering letter.

This incident raises some questions which are –

  • When the initial cheques was issued in my name, how the money has been utilized by someone else.
  • Even though requesting, LIC not mentioning forged person name in the covering letter after recovery of the forged amount.
  • Did LIC filed FIR against forged person? If not why?

Who did this Fraud ?

When I came to know about this incident, the first thing which came to my mind was that it was some “insider” from LIC who did this, because its almost impossible to surrender the policy without producing the original policy document, forging the signatures and then redeeming the cheque in your own account. But the truth is that the fraud was not done by anyone from LIC office. Then Who ?

It was his Mother and Younger Brother !

Shocked ! ?

Let me now share in Muthu’s words how his mother and younger brother did this fraud.

The Fraud was done using “re-cycle” procedure

Here is exactly what Muthu shared about the fraud procedure

Dear Manish,

Since the bond was in my mother custody they surrendered that policy with the forged signature (read more about Identity Theft)

When the cheque was issued in my name, LIC agent by name Yeshoda has given a cunning idea to re-submit the cheque received in my name to LIC and another policy to issue for the same value for different name ( This process is called re-cycle procedure).

Finally once the policy has been issued in their name. They can easily surrender that policy and utilized the policy amount.

This is worst ever experience that money can change “ANY ONE”.

Do you have LIC policy ? Are you sure this same fraud can not happen with you ? How will you prevent it ?

33 replies on this article “The Shocking story of – How LIC policy was surrendered using Forged Signature”

  1. shiva says:

    My lic jeevan mitra policy is from November 2001 to October 2021.
    If I stop this in August 2015. How much money I get.
    Its premium is 530 per month. Sum assured is 1 lakh.
    Its surrender value is written as “This policy can be surrender for cash after the premiums have been paid for at least 3 years. The minimum surrendered value allowable under this policy is equal to 30% of the total amount of the within mentioned premiums paid excluding the premium for the 1st
    year and all extra premiums ,the cash value of any existing vested bonus additions will also be allowed.”
    1)Is there any scope to stop this policy because its a salary saving scheme and deducted at salary itself and take money instantly or any disclosed conditions will be there?
    2) I have calculated like this. Is this correct?
    November 2001 to Aug 2015= 165 months – 1year
    So 153 months .
    153*530=81090+ 30% of 81090= 81090+24327=105417
    105417 is final amount I get.

    1. Hi shiva

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that


  2. Vikram says:

    Confusing story because LIC stopped cheque payments in 2012. Only NEFT.

  3. smitha says:

    Hi Manish,

    Had a query. I bought a SBI Smart Shield Term plan. When i received the policy document my name was mentioned as Mrs Smitha. I took up the matter with the officials who said that they would issue me a letter stating that the name is Ms Smitha and not Mrs. When i refused and asked for a new policy with the correct name or canellation of the policy, they agreed to issue me the new policy. But they are now telling me that once hte new policy is issued, i will not have the option of the 15 day pre look period even if there is an error in my policy. Which means if they goof up again in any of my details, i cannot cancel the policy. Is it acutally the case? In case there is a goof up again and i have to cancel the policy withing 15 days of receiving it can i do it? If they refuse whom can i approach?

    1. bcd says:

      Technically the cooling off period is from the issuance of the policy. In your case having Ms/Mrs would not making any fundamental change to the policy payouts or performance of the plan. Hence you should not be worried by that.

      On the other hand give them a freelook request right now and tell them you will take the policy somewhere else. Should help you get your freelook time

      Having said, your question must be raised not in the LIC forged signature comment section as you will have delays in getting more answers.

    2. Its a mistake from their side and I think they should change it keep the cool off period, Now its a matter of your understanding with them . If there is any dispute, you might need to move to consumer court !

  4. Pearlraj says:

    Hence LIC of India does not come under RTI Act of 2005.

  5. Pearlraj says:

    Dear All,


    LIC of India has been declared as an independent Public Authority under Section 2(h) of the Right to Information Act of 2005.

    1. Thanks for sharing that, I was under impression all these days that LIC of India does not come under RTI !

  6. Pearlraj says:

    @ Joel Trinidade

    She is my own mother and younger brother

  7. Surjit Singh Dhillon says:

    I have an old LIC policy which they are unable to trace. Policy number is 23429106 issued on 28-1-1969 for 10,000.00.
    Can any body advise me how to go about.

    1. I suggest file a RTI on this and ask questions, they will not be able to avoid the answers !

  8. chander says:

    1) The recycle” procedure speaks of the brainless “system designers'” at LIC.
    All systems should be designed so that they cater for the “unforeseen circumstances” (here fraud etc).
    2) ECS transfer of the maturity proceeds: This info (bank A/c, IFSC code etc) is collected only just before the “maturity” (i.e. you outlive).
    LIC should make it compulsory for all premia to be paid through cheques or ‘systematic’ bank transfers (if premium exceeds, say Rs 1000) — like they have Salary deduction for employees. This way, the bank details get registered with LIC from Day 1!

    1. Thanks for sharing your views . I recently came to know that this “recycle” thing has stopped in LIC !

      1. Rakesh Kumar says:

        I have come to know that the LIC has stopped payment through cheques(surrender/maturity/bonus etc), It will only do NEFT Transfers(not sure on this, if this is an option or just an alternative arrangement). But however, people should switch from normal mode to NEFT mode. All you need to do is download the form from LIC website or visit any LIC office/customer zone, with the following:
        1. Policy Numbers
        2. Cancelled Cheque which has your name on it
        This facility will help lot of people, who keep shifting there house and cheques get lost in transit, it will also stop frauds as done above.

        1. Thanks for that information Rakesh

          Has this change happened even at small villages and towns ?

          1. Rakesh Kumar says:

            Manish, My account can be considered in a village area, not very remote though. A letter was sent at my parents current residence(my policy address), and it asked to deposit a cancelled cheque. I inquired the same in Bangalore office and was able to submit the forms in Bangalore office and to my surprise after the NEFT form submission with 5 days i had recieved 5k money back, from one of my lic policy. For the same my parents had talked to the agents and lic office, but there was no success in getting the amount earlier.

            1. Thanks for sharing that update Rakesh !

  9. jagdish manghnani says:

    dear sir

    lic takes precations while surendering the policy. one the agent who will recieve the cheque has to sign as the witness to the surender form that the policy holder has signed the form in his prsence. another letter has to be taken from the policy holder to use the amount for new policy and giving the realatiship with the proposor.the agent is at fault not tthe insurance company.therfore a rti shold be filed with lic asking for the photocopy of the docouments submiteed for surender of the policies and fir filed againt the person who has witnesed the same.

    1. Jagdish

      Thanks for sharing what happens in general . I know this case is a little off case , ITs just to show the possibilities which can happen. Note that a LIC agent himself was helping those people who did the fraud !

  10. Raghavendra says:

    You changed the name of the person (Muthu) to conceal his identity but linked to the comment he has written in JI revealing his original name. 🙂

    1. Actually his actual name is MUTHU only 🙂 . The screen name is a fake one !

      1. Raghavendra says:

        Ha ha. Now you have given out the actual name any way 😛 😀

        Kidding. Thanks for the great article.

        1. Actually I had asked the permission of the guy if he wanted to display his name and he was OK with it , so no worries

  11. Anand says:

    The re-cycle procedure should be stopped immediately.

    1. Hi Anand

      I came to know recently that its stopped now in LIC

  12. Soms_r says:

    Hi, I am not sure of the factual correctness of the last part, where the policy proceeds of Muthu’s Policy were re-cycled and then the new Policy was surrendered to get the money. While it is definitely possible to used forged documents to surrender the first Policy and then take another Policy, the second Policy cannot be easily surrendered to realize the Policy Monies. The clock will be reset again, and one has to wait for another 5 years to surrender the new Policy.

    1. Soms

      You can cancel the policy in first 15 days (lookup period) . May be that was used. Its just my guess !

  13. Joel Trinidade says:

    Muthu kindly confirm :

    Its must have been your step mom and brother.

  14. Bhaskar says:

    Sad to know his mother, probably under the influence of her younger son, perpetrated this fraud. If family member, close “friend” is committed to commit fraud on you, then no one can stop it. They have access to all your identity, financial etc documents. Better pray to God that it does not happen to you.

    1. THanks for sharing your views . Why do you think it was influence of younger son only ? It can be mother also who might have planned things ?

  15. S.Ravi says:

    Dear Sir,

    It has been the practice and procedure since more 5 years, the maturity proceeds/ premature/loan amount will be credited only to S.B.a/c of the policy holder and not by cheque. It should have the handiwork of insider in LIC who would have fraudulently obtained cheque for the surrender value. If a thorough investigation is done we can find out who in LIC has initiated the work and who has authorised the transaction and find out the culprit. We can find out who, when and under whose authority the transaction has been processed by invoking the exceptional report from the system which is generated at the end of every day.

    1. Thanks for sharing your wisdom . I am not sure if it has starting in all LIC branches across INdia ?

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