Business Standard

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

- BINDISHA SARANG

Life insurance policies sold through agents tend to have a higher rate of unclaimed funds compared to those sold via the bancassura­nce channel or digital platforms, according to a recent report in Business Standard.

“Unclaimed life insurance funds refer to the death or survival benefits from policies that have not been claimed by beneficiar­ies or policyhold­ers,” says Tarun Mathur, cofounder and chief business officer, Policybaza­ar.com.

Policyhold­ers and beneficiar­ies need to be proactive to avoid funds that belong to them from going unclaimed.

Why funds go 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,” says Amish Banker, senior executive vice president, customer service and operations, ICICI Prudential Life Insurance.

Naval Goel, chief executive officer (CEO) of Policyx points out that 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,” says Mathur.

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,” says Goel.

Know-your-customer (KYC) updates: Failure to update Know Your Customer (KYC) documents or bank details can also prevent policyhold­ers or beneficiar­ies from claiming benefits. Sometimes, policyhold­ers cannot be contacted due to change of address and other contact details due to, say, marriage, 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,” says Gagandeep Singh, senior president and head of health, Life POSP vertical, Policyboss.com.

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 partnershi­ps and companies. “Disputes may arise in Keyman insurance policies if employers or proposers refuse to pay,” says Singh.

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,” says Sanjay Arora, executive vice president and head of operations, Tata AIA Life Insurance. When policyhold­ers or nominees reach out, insurers pay them the death or maturity benefit. Goel informs that 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 ~1,000 or more on their websites,” says Banker.

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,” says Vighnesh Shahane, managing director and chief executive officer, Ageas Federal Life Insurance. The customer support department of insurers also provides guidance.

Policyhold­ers and 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,” says Goel.

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 filing claims,” says Singh.

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 minimise the risk of funds being left unclaimed,” adds Singh.

Shahane emphasises that nominee bank details are crucial for processing unclaimed amounts. Arora adds that customers should update their NEFTS to ensure they can receive instant payments.

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