There is over Rs. 15,167 crore in unclaimed money from insurance policies lying with insurance companies in India. This unclaimed money comes from death claims, maturity claims, and other sources that policyholders and beneficiaries have not claimed for over 6 months. Insurers are required to disclose unclaimed amounts on their websites and in financial statements. If unclaimed for 10 years, the money is transferred to the Senior Citizens Welfare Fund, but can be claimed for up to 25 years. Common reasons for unclaimed amounts include beneficiaries being unaware of policies, outdated contact information, and dependencies on cheque payouts.
3. Unclaimed amount is money that is due to policyholders or beneficiaries in the form of
death claim, maturity claim, survival benefits, premiums refunds or indemnity claims-
including accrued interest- but has not been claimed for more than 6 months since the
settlement date.
Insurers can invest this money in debt products like money market instruments, liquid
mutual funds and fixed deposits; and the investment income needs to be paid to the
policyholder or the beneficiary if she makes a claim in the future. Penalty, if any, can be
adjusted against this investment income.
The insurer can deduct a charge from this fund to manage it, but the costs are capped at
20 basis points.
In order to make your job easier, insurers now allow you to spot your unclaimed money
on their websites, where you need to look under the tab titled unclaimed amount of
policyholders.
To save the insurers the trouble of putting out details of very small claim, the rules
allow companies to publish details only if the unclaimed amount is Rs1,000 or more.
4. Rs. 15,167 crore unclaimed money of policyholders lying with insurer
According to Insurance Regulatory and Development Authority Of India
(IRDAI) data, as much as Rs 15,167 crore amount of policyholders is lying
unclaimed with 23 life insurance.
Out of the total unclaimed amount of Rs 15,166.47 crore, as on March 31, 2018,
insurance behemoth Life Insurance Corporation (LIC) is sitting on Rs 10,509
crore, while the 22 private sector insurers account for the remaining Rs 4,657.45
crore.
Among the private insurers, ICICI Prudential Life Insurance Co has 807.4 crore
of unclaimed insurance claims followed Reliance Nippon Life Insurance (Rs
696.12 crore), SBI Life Insurance Co (Rs 678.59 crore) and HDFC Standard Life
Insurance Co (Rs 659.3 crore).
8. The reasons why there is such a big number attached to
the total unclaimed money are listed below:
Unaware nominees
Contact details not updated
Dependencies on cheque for funds transfer
10. As per the new rules, if no insurance claim is made for a period of 25 years after the
transfer, you will have to forfeit the money and it will belong to the Government.
According to Insurance Regulatory and Development Authority of India’s (IRDAI)
circular (released on 25th July), unclaimed moneys of insurance companies will
move to Senior Citizens Welfare Fund after lying unclaimed for 10 years from the
date it was payable to the policyholder or the beneficiary.
The government had created this fund through the Finance Acts, 2015 and 2016, to
promote the welfare of senior citizens, in which notified institutions have to transfer
unclaimed monies. These institutions include: postal savings scheme and
Employees Provident Fund schemes. In an amendment in April this year, the
government also added insurance companies to this list.
11. Once you have identified the money, you can approach the insurer directly or follow the
steps listed on the website. To reduce unclaimed amounts, the regulator has made
electronic payments mandatory with the exception of small premium ticket size of up to
Rs10,000.
Also, the rules make it clear that even after 10 years, insurers will need to display
information about any unclaimed amount of Rs1,000 or more on their respective
websites.
However, policyholders and beneficiaries are eligible to claim the unpaid dues
(unclaimed money) up to 25 years from the date of transfer of the same to the Senior
Citizen’s Welfare Fund.
NOTE: If no claim is made for a period of 25 years after the transfer, you will have to forfeit the money and it will
belong to the government.
13. According to a reply in the Lok Sabha recently by Minister of state (Finance)
Nirmala Sitharaman, Insurance Regulatory and Development Authority (IRDA)
has directed all insurance companies to disclose unclaimed amounts as a separate
line in their financial statements. The companies have also been asked not to
appropriate/write back the unclaimed amounts under any.
The Minister, in her reply to the Lok Sabha, also said that the authority (IRDA),
has mandated the settlement of dues of policyholders through electronic mode
and display of unclaimed amounts on their websites with an option for ‘Search/
Find’ for the convenience of the policyholders/ nominees/ assignees.
A circular issued by IRDA said the increase in unclaimed amounts is largely
because of dependents not being aware of existence of a life insurance policy.
Among other reasons that the IRDA said is leading to growing unclaimed amount
are delay in settlement of claim and change in address of the insured.