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How you can stop your investment from slipping into insurance unclaimed funds

How you can stop your investment from slipping into insurance unclaimed funds

Recently, PTI reported that as much as Rs 15,167 crore of policyholders’ money was lying unclaimed with 23 life insurers as on March 31, 2018. Out of this, Life Insurance Corporation (LIC) has Rs 10,509 crore as unclaimed funds, while the remaining Rs 4,657.45 crore is with the 22 private sector insurers.

Key reasons for rising unclaimed amount with these insurance companies

1. Failure in filing claims

The biggest reason for a large number of unclaimed funds lying with the insurer is not filing claims. An insurer not receiving any intimation from a policyholder or its nominee, especially in case of term insurance claims. It does not make him liable to pay the claim amount. In case of a policyholder’s unfortunate demise, the nominee might end up not claiming the policy probably. Because he/she was unaware of the term plan or he/she was unable to find the policy document.

2. Change in contact/bank account details of the beneficiary

Change in contact/bank details of the beneficiary (in case of claims payable during survival and maturity benefit under money-back plans) and the same not being updated by the policyholder with the insurer is another reason of rising unclaimed funds.

For instance, you have a money-back plan that pays 20 percent of the sum assured every 5 years. However, the pay-out cheques sent by the insurer never reach you. Because you have moved to a new address and have not updated the same with the insurer. And the other reason is the failure in processing the NEFT/ECS orders due to incorrect details or closure of bank account.

3. Policy cancellation and failure in refund processing

Policy cancellation and refund money not reaching the policyholders is another reason for the rise in unclaimed funds. For instance, you have taken a life insurance policy with a limited premium payment period of 10 years for a policy term of 30 years. But, after 5 years you decide to surrender your policy, so the refund amount could be small which is easier to slip from your follow-up list and adds to the unclaimed amount.

4. Dispute among beneficiaries

In case there are multiple beneficiaries, a probability of dispute among them is high. In such a scenario, in case of death of the policyholder, there would be no information to the insurer. And based on the status of the policy the money payable could get transferred to the unclaimed fund.

How to find if any of your claims are pending with the insurance company?

There are multiple touch points through which the policyholder can find out if any claims are pending for a particular policy with the insurance company. A policyholder can call up/email the customer care of the insurer or visit the branch and based on the policy number and validation of the identity the details pertaining to the policy will be shared by the insurer with the policyholder.

The policyholder’s name and date of birth are mandatory, whereas PAN and policy number could be optional. Based on the above information entered, the insurer’s website on matching of the mandatory two shows the amount lying unclaimed with the insurer.

What should policyholders do now?

A lot of policyholders do not share the insurance details with their family members nor keep the record of insurance policies properly. There are several scenarios where the next of kin are unaware of the insurance cover. Policyholders should record all his/her financials and insurance policy details at one place for easy reference in future. For instance, one can use iCare editable e-book at no extra cost to maintain a record of all such policies and financials of a family.

Often claims are pending with insurance companies due to some reasons. Every claim has an associated claim ID. You should log in to the insurer’s website and look up the status of your claim using this ID. This method will help you identify the specific reason of why the claim is unsettled and what action you need to take.

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