MAKE CLAIMS EASIER: SHARE
POLICY INFO, FILING INSTRUCTIONS WITH FAMILY
In numerous instances,
members are unaware of the policy’s existence, let alone its details
Life insurance policies sold
through agents tend to have a higher rate of unclaimed funds compared to those
sold via the banc assurance channel or digital platforms.
“Unclaimed life insurance
funds refer to the death or survival benefits from policies that have not been
claimed by beneficiaries or policyholders.
Policyholders and
beneficiaries need to be proactive to avoid funds that belong to them from
going unclaimed.
Lack of awareness: If policyholders fail to share crucial details with their beneficiaries, it can hinder
the claim process. “We have come across instances of families being unaware of
the purchase of a life insurance policy.
Policies can remain
unclaimed due to beneficiaries predeceasing the policyholder or the absence of
a nominated beneficiary. Sometimes, the nomination is not filled or updated
with the insurer.
Policyholders should update
their mobile number, email address, bank details, and address with the insurer.
“Updating beneficiaries’ contact details is crucial for the insurer to identify
rightful beneficiaries in case of unforeseen events.
Forgotten policies: People with multiple policies may forget those purchased years ago or
for small sums. “Since many policies have long tenures, sometimes extending up
to 100 years, policyholders at times forget about certain policies.”
Know-your-customer (KYC) updates: Failure to update Know Your Customer (KYC) documents
or bank details can also prevent policyholders or beneficiaries form claiming
benefits. Sometimes, policyholders cannot be contracted due to change of
address and other contact details due to, say, marriage, and relocation to a
different place or abroad, or switch to non-resident status.
Claims not submitted: Policyholders and beneficiaries need to proactively
initiate the claims process. “A significant portion of unclaimed funds arises
due to policyholders failing to submit maturity claims or death claims.
Sometimes, claims are deemed
non-payable due to disputes or other reasons.
Business insurance: In these policies, unclaimed funds can arise due to disputes among partners
or the dissolution of partnership and companies. “Disputes may arise in Keyman
insurance policies if employers or proposers refuse to pay.
Where are unclaimed funds parked: Insurers try to locate and notify beneficiaries
through letters, phone calls, and other means of communication. If no response is received within 12 months,
the amount is classified as unclaimed. These funds are transferred to the
“Unclaimed funds” account and invested in market-linked funds. “These funds are
invested according to unclaimed fund regulations and are expected to earn 4 per
cent or more per year.” When policyholders or nominees reach out, insurers pay
them the death or maturity benefit. After 10 years unclaimed funds, are
transferred to the Senior Citizens’ Welfare Fund (SCWF).
Checking for unclaimed funds: Policyholders or beneficiaries should search the
insurer’s website for these funds. “Insurers are required to display
information about unclaimed amounts of Rs 1000 or more on their websites.
Insurers offer online search facilities on their
websites. “Individuals can search for outstanding claims using basic details
such as the policyholder’s name, date of birth, policy number, and permanent
account number. The customer support department of insurers also provides
guidance.
Policyholders
or beneficiaries can also visit a branch. Insurers usually ask for bank details
and KYC documents. “If a beneficiary reaches out for death benefit, their
identity proof, policy document, and proof of relationship with the deceased
are asked for”.
Prevent unclaimed funds from arising: Policyholders must maintain records of all their
policies and keep their family members informed. “Share policy details, contact
information, and instructions for filling claims.
Regularly review policies to assess changing needs,
update beneficiary information, and ensure that policies remain active.
“Regular reviews help policyholders stay informed about their coverage and
minimize the risk of funds being left unclaimed.
Shahane emphasizes that nominee bank details are
crucial for processing unclaimed amounts. Customers should update their NEFTs
to ensure they can receive instant payments.
Ø Insures must transfer unclaimed policyholder amounts that are over 10 years old to the Senior Citizens’ Welfare Fund (SCWF) by March 1 each year
Ø Policyholders or beneficiaries can claim their dues within 25 years from the date of transfer from the insurer to the SCWF
Ø According to Section 126 of the Finance Act, 2015, unclaimed funds will escheat (be taken over) to the central government if not claimed within 25 years.
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