The hidden truth behind insurance companies unclaimed premium.

1. UNCLAIMED MONEY FROM COVERAGE LAPSES
BY
AKSHITA GARG
AMITY UNIVERSITY, MUMBAI

2. WHAT IS INSURANCE?
 Insurance is a contract, represented by a policy, in which an individual or
entity receives financial protection or reimbursement against losses from an
insurance company. The company pools clients' risks to make payments more
affordable for the insured.
 Insurance policies are used to hedge against the risk of financial losses, both
big and small, that may result from damage to the insured or her property, or
from liability for damage or injury caused to a third party.

3. WHAT IS INSURANCE PREMIUM?
 An insurance premium is the amount of money an individual or business pays
for an insurance policy. Insurance premiums are paid for policies that cover
healthcare, auto, home, life, and others.
 Once earned, the premium is income for the insurance company. It also
represents a liability, as the insurer must provide coverage for claims being
made against the policy. Failure to pay the premium may result in the
cancellation of the policy.

4. WHAT IS INSURANCE CLAIM?
 An insurance claim is a formal request by a policyholder to an insurance
company for coverage or compensation for a covered loss or policy event.
The insurance company validates the claim and, once approved, issues
payment to the insured or an approved interested party on behalf of the
insured.
 Insurance claims cover everything from death benefits on life insurance
policies to routine and comprehensive medical exams. In many cases, third-
parties file claims on behalf of the insured person, but usually, only the
person(s) listed on the policy is entitled to claim payments.

5. WHAT IS UNCLAIMED INSURANCE PREMIUM?
 An unclaimed amount is the money due from a life insurance company to the policyholders
or their beneficiaries (nominees). This could be in the form of death or maturity claims,
survival benefits, premium refunds (when a policy is cancelled) or indemnity claims –
including accrued interest, etc. Any amount that has not been claimed for more than 6
months since their settlement date is considered an unclaimed amount by a life insurance
company. The aadhar link to your bank account and it creeping into several financial
instruments as a contact field will reduce the probability of losing out with unclaimed money
from different financial products and services. But, if you have already missed out on what is
rightfully due to you from the past, there are ways to recover it.

6. HOW DO INSURANCE COMPANIES MAKE MONEY?

7. THE HIDDEN TRUTH
 Insurance companies make money because a massive amount of ALL life insurance coverage
lapses.
 Most people pay into a term or whole life policy for years, often thousands and thousands of
dollars, and then allow those same policies to lapse… And the insurance company never pays out
a penny. Yes, if the insured passes away, then the company pays a death benefit, but this is a fairly rare
occurrence due to the high lapse rates. Some sources suggest that less than two percent of term policies
ever result in a death claim. (Millions of death benefits also go unclaimed by beneficiaries, but lost life
insurance is a whole other topic for another day.)
 As you can imagine, the insurance industry likes its profitable business model: Collect a lot of money and
pay very little out. Have consumers buy their product, make regular payments, and then let that same
product be rendered useless after allowing it to lapse some years later.

8. THE SOLUTIONS
 Convert from term to permanent insurance. If you have a term policy, some term life policies can be
converted to permanent insurance, without having to undergo a medical exam or provide any health
information. This enables an insured to keep coverage that would otherwise lapse at the end of the term.
Permanent insurance provides coverage until death. Contact Us Today and provide us with the name of
your insurance company, how long you’ve had your policy, and how many years the term policy is for
(10, 15, 20, and 30 years are the most common).
 Apply for permanent insurance instead of term. Universal Life Insurance is a wonderful combination
of permanent life insurance with a lower premium than traditional Whole Life Insurance. If you are in
fair, good, or great health, this is a great option to consider. We even offer Universal options with “No
Medical Exam” needed.

9. DISCLOSURE OF UNCLAIMED MONEY ON WEBSITE
 In order to ensure timely pay-out to policy holders, IRDAI has asked insurance companies to make
various disclosures such as the amount which remained unclaimed for more than six months from the
due date of settlement, nature of the unclaimed amount (death claim, maturity benefit, etc.), details of
action taken for payment of the unclaimed money by the insurer and the status of the unclaimed
amount.
 The IRDAI has directed all insurance companies to post unclaimed insurance money on their
respective websites, where the unclaimed sum is at least INR 1,000. The lion’s share of over INR110
billion unclaimed at 30 June was with life insurance companies. More than half of it – INR60 billion
belongs to LIC, the biggest life insurer in the country. General insurance companies have a combined
unclaimed balance of about INR 9 billion.
 Initially, insurers have been told to upload this information on their website by 31 March 2014.
Subsequently, they have been advised to put up this information every six month by 30 September
and 31 March every year. Among non-life insurers, United Insurance had the maximum unclaimed
amount at Rs 147 crore followed by ICICI Lombard (Rs 102 crore) and Bajaj Allianz (Rs 92 crore).

10. THANK YOU