Unclaimed insurance payout: Know how you can claim it

Published: December 19, 2018 12:05:04 AM

The information regarding unclaimed amounts needs to be updated by the insurers on their respective websites on a half-yearly basis.

Unclaimed insurance payout: Know how you can claim it (Illustration: SHYAM Kumar Prasad)

By Sunil Sharma

Unclaimed amounts include any money held by insurers but payable to policyholders or beneficiaries, including interest accrued, remaining unclaimed beyond six months from due date or settlement date of such amount. The unclaimed amounts may arise in respect of death claim, health benefit claim, maturity claim, survival benefit, surrender or foreclosure, premium due for refund, premium deposit not adjusted against premium and indemnity claims.

In case of general and standalone health insurers, premium received in advance, unallocated premium which has neither been set off or adjusted against the premium during the currency of the policy nor has been refunded within six months from the expiry of the policy are considered as unclaimed amount.

Why are there unclaimed?
Unclaimed amounts may occur due to any of following reasons:
The beneficiary is not traceable or not contactable at the time of claim settlement
Bank details requirements not provided by policyholder/insured/beneficiary
KYC of beneficiary not being provided.
Difficulty in identifying the beneficiary under a policy.

Process to get unclaimed money
The beneficiary under the policy may contact the nearest office of the insurer or customer care number, with policy details and KYC. Once the identity of the beneficiary is validated, the unclaimed amounts with applicable interest on unclaimed money shall be paid to the beneficiary.
Insurance companies are engaging with various service providers who can help identify the coordinates of beneficiaries which may be different from the one provided at the time of buying the policy. Insurers are now asking alternate contact numbers, mailing and permanent address at the time of buying policy or at the time of claim intimation to ensure accuracy of latest coordinates of customers in their records.

Companies are also advising policyholder to update their contact number and address, as and when there is change in address. Insurers send maturity details by SMS alerts or email or any other mode as may be specified by the regulator.

Obligations of insurers
Insurers cannot appropriate or write back any part of the unclaimed amounts belonging to policyholders/ beneficiaries. The Policyholder Protection Committee of the board of every insurer oversees the timely payout of the dues to policyholders. Policyholders Protection Committee shall review the steps taken by the insurer to reduce unclaimed amount by identifying the policyholders or beneficiaries, creating awareness, etc., in terms of the standard procedures and policy on customer service approved by the board.

Every insurer is required to furnish the details of the action taken and status of the unclaimed amount to the authority. All insurers are required to display the information about unclaimed amount on their respective websites. The information regarding unclaimed amounts needs to be updated by the insurers on their respective websites on half-yearly basis.

Treatment of unclaimed money
The unclaimed money is invested by the insurer and the investment income would be credited to the respective unclaimed account, after deduction of 50 basis points as administration and fund management charges. Unclaimed amounts of policyholders for a period of more than 10 years is required to be transferred to the Senior Citizens’ Welfare Fund (SCWF).

The writer is chief actuary & chief risk officer, Kotak Mahindra Life Insurance Co Ltd

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.