Rs 15,167 crore unclaimed money of policyholders lying with Life Insurance Companies

As per Insurance Regulatory and Development Authority of India (IRDA), a staggering amount of Rs. 15,167 Crore is lying unclaimed with 23 Life insurance companies. This money belongs to policyholders and/or their beneficiaries

What is unclaimed money?

Unclaimed amount is money that is due to policyholders or their beneficiaries in the events of death claim, maturity claim, survival benefits, excess premiums refunds (including accrued interest thereon) but has not been claimed for more than 180 days from the settlement date.

Note that even though the insurers can invest this money in debt products like money market instruments, liquid mutual funds and fixed deposits, the investment income needs to be paid to the policyholder or beneficiary if he / she make claim in the future.

Out of the total unclaimed amount of Rs 15,166.47 crore, as on March 31, 2018, Life Insurance Corporation (LIC) is has biggest pie at Rs 10,509 crore, while the private sector insurers account for the remaining Rs 4,657.45 crores.      

Among the private insurers, ICICI Prudential Life Insurance leads the pack at 807.4 crore of unclaimed insurance money followed Reliance Nippon Life Insurance (Rs 696.12 crore), SBI Life Insurance Co (Rs 678.59 crore) and HDFC Standard Life Insurance Co (Rs 659.3 crore).

Why unclaimed?

Change in communication address: IRDA through its notification in FY 15-16 have asked insurance companies to go for settlement through direct credit (to bank account), but there are old cases in which payment (death claim / maturity claim cheque) was sent to addresses on which policyholders don’t stay anymore. To avoid this, ensure that the address is updated in the insurer's records. 

Bank Account not updated with Insurance Companies: Today bank account statement is taken as a standard practice for getting Life Insurance but previously hardly any policies were linked to any account. We can safely say more than 90% of unclaimed money stays unclaimed due to lack of linked bank account details. One should link his bank account with policies at the earliest not only for final maturity claims but also for survival benefits (if applicable). Note in policies with minor as life assured at inception, bank account should be updated as soon as the Life assured becomes major.

Nominees not aware of the policy: This reason may not sound practically possible, but this is one of the major reasons behind unclaimed especially in old cases which are pending for more than 2-3 years. The nominees may not be aware that the policyholder had such an insurance policy. Sometimes nominees don’t go for claims if they are simply unaware of whereabouts of the policy document. Here we wish to mention two points, one is that to have a central place at your house /office wherein all documents related to financial investments (insurance , mutual funds etc) are kept always. This is useful for nominees to know where the policy docs can be. Secondly, we must note that in case policy bond is misplaced, indemnity bonds can be made and claim can be lodged with insurance company. Each insurance company has format of the indemnity bond with them. All beneficiary/ nominee has to do is to contact advisor or insurance company.

           

Invalid / lost / misplaced Cheque: Cheque is one financial instrument that has validity date and can become time-barred or misplaced leading to unclaimed amount. Now a days insurers insist on electronic transfer of funds and thus asking for blank cancelled cheque at the time of application itself so that payments can be made through NEFT.

Responsibility of Insurance companies

Board level committee for policyholder protection is appointed in each insurance company which is entrusted with the responsibility of monitoring the timely payout of the all dues to policyholders.     

It also oversees the steps taken by the insurers to reduce unclaimed amounts as part of customer service.

How to find unclaimed amount

IRDA had asked the life insurance companies to provide a search facility on their sites to enable policyholders or beneficiaries to find out whether any unclaimed amounts are lying with these companies.             

Policyholders/beneficiaries are required to enter the details like policy number, PAN of the policyholder, name of the policyholder, date of birth or Aadhaar number, in a window provided on the website of the insurer to find out the unclaimed amount. The insurers have to update information regarding unclaimed amounts on their websites on a half-yearly basis. 

Steps to check unclaimed amount on LIC website

Go to www.licindia.com

Click on “unclaimed amounts of policyholders” tab at bottom of the page 

Page as shown below will open. Enter variables like policy number, policy holder name, DOB and Pan Card. Note Policyholders full name and DOB are mandatory fields. 

Details will be dispalyed if any unclaimed money pertaning to polucy/policyholder is there. If any details shown, then visit LIC office with policy papers, ID documents along with Bank statement.

Please contact us in case you need any assistance in unclaimed money pertaining to any insurer. Please call us at 9325295502 or email us at [email protected]