قالب وردپرس درنا توس
Home / Insurance / How to track unpaid life insurance benefits?

How to track unpaid life insurance benefits?



Life insurance companies have careful processes in place to ensure that the various benefits are paid out in a fair and smooth manner. However, have you considered what happens when the policyholder does not claim any benefit when it expires. Or a scenario where the insurance company cannot pay the benefit that policyholders are inaccessible / unattainable or instead where the payment is not made since the insurance company has not been estimated if an insured event occurred (death). [19659002] These may look like isolated incidents; However, you would be surprised to know that a according to official data, 1

9 15166.47 crore was unrecovered by 23 life insurance companies on March 31, 2018. Of this Ј ] 10 509 crore was with Life Insurance Corporation of India (LIC) and Ј SEK 4,657.45 with private insurance companies. Compared to this, for 2012-13, Rs 4,865.81 was the undrawn amount for the entire industry. This is an increase of 25 percent annually over the past five years in unpaid money by policyholders.

Learn more.

What is qualified as unpaid benefits?

Some common examples are according to:

When these do not claim more than six months from the due date for settlement of the claim amount

Some important contributors are:

  1. Change of address and contact information : Many policyholders do not inform the company when changing their address and / or contact information. Life insurance is a long-term contract. It is possible that the agent who has sold the policy is no longer associated with the company when the benefits fall due. This makes it very difficult for the insurance company to track such policyholders.
  2. Cannot track policy / bad documentation : the premium payment period is over. For example: Let's take an example of a short pay policy where the premium payment period is 5 years and the insurance period is 20 years. During the premium payment period, the company sends periodic alerts using grant information, receipts, etc., which serve as a reminder of the policy. But after the premium payment period is over, the communication from the company can stop and some people enrolled in their daily schedules and routines may lose track of the policy and thus not claim the benefits when they are paid.

If such a policyholder changes his address and contact details without specifying the insurance company, the company will be helpless until the policyholder or his beneficiary arrives.

In a one-time premium and short pay policy, it is easy to lose track unless the policyholder is diligent and keeps the correct register.

  1. Not informing recipient / family : Many of the planning and research go into buying a life insurance. But your responsibility does not stop buying the perfect plan. You must also inform your nominee (s) of the policy and where the policy documents are held so that they can claim it if the need arises, the entire purpose of buying life insurance is defeated.

There are cases where the policyholder has not informed his beneficiary / family members of his life insurance policy for any reason (conflicts / suspicions etc). A beneficiary who is not aware of the existence of the policy is of course unable to claim.

What insurance companies do to reduce unpaid benefits?

Companies based on IRDAI instructions are now making all payments for amounts greater than Rs 10,000 / – only via ECS / NEFT / RTGS to the policyholder's bank account. For policies that are issued after 2014, it is mandatory for the insurance companies to register bank details during policy issuance and to make an electronic transfer of funds.

Pension funds also contributed greatly to the problem of unpaid funds. Many pension policies had funds that were not sufficient to buy annuities. Knowing it is circulated on August 3, 2018, IRDAI relax the rules for pension products and allowed policyholders to fully withdraw the cumulative amount if it were not sufficient to buy the minimum annuity under the annuity rules. The circular quoted that this was one of the reasons for unpaid money at the insurance companies.

How are unpaid insurance benefits tracked?

Life insurance companies now provide information on unpaid benefits on their website. You can identify the insurance information by providing information such as the policyholder's name, policyholder's date, policyholder's PAN (optional) or policy number (optional). Insurance companies must update information on unpaid amounts on their websites half-yearly.
If the insurance company's website shows outstanding amounts against a policy, the policyholder or recipient can approach the company with the policy document and know your customer (KYC) details. The insurance company can apply for additional documents / verifications to prevent fraud.

What happens if the amount is not claimed?

As part of the Finance Act 2015, the Government introduced the Act on the Senior Citizens' Funds in 2015 (SCWF). Under current regulations, all insurers who have claims for policyholders for more than 10 years must transfer the same to the elderly care fund (SCWF). This fund aims to promote the well-being of our elderly.

Furthermore, according to IRDAI, policyholders / beneficiaries must be entitled to claim the fee according to their policy up to 25 years from the date of transfer of the same to SCWF by the insurer concerned. If no claim is made up to 25 years after transfer to SCWF, such amounts shall be made to the state, in accordance with section 126 of the Finance Act, 2015. The policyholder or beneficiaries cannot claim the fee after that.

Conclusion

A little caution on the part of the policyholders by updating the insurance company about any changes in their address and contact details and by keeping their recipients informed of the policy can go a long way in addressing the issue of unpaid benefits. What do you usually have a life insurance if you or your loved ones cannot enjoy the benefits?