Details of unclaimed policies

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IRDA directed insurance company to publish the details of unclaimed policies. It released a circular on July 25th according to which the money not claimed by policy holders will be diverted to senior citizen welfare fund.  If a policy is not claimed within 10 years of the date to be claimed, the money will move to this fund.

Insurance companies too from this year…

·         This senior citizen welfare fund is formed according to finance act of 2015-16.

·         It was stated in the act that the money not claimed in post office savings schemes and employee future fund has to be diverted to this fund.

·         Now the latest amendment made in April 2017, directives were issued to divert the unclaimed money of insurance policies also to this fund.

What is unclaimed money…

·         Generally, death claims, maturity claims, survival benefits, premium refunds along with the interest need to be claimed within due date.

·         If the policy holder or nominee fail to claim the policy even after 6 months of duet date, then it is considered as unclaimed amount.

What insurance company does with this…

·         Insurance companies have permission to invest the premium money in tools like money market, liquid mutual fund and fixed deposits.

·         But if there are profits from these, the customer has to be paid.

·         Can deduct from profits if there are penalties.

·         Insurance companies can use the unclaimed amount for maintenance purposes but this cannot be more than 20 basis points or 0.2 percent.

For policyholder’s benefit…

·         The insurance companies will put the details of unclaimed policies in websites for the benefit of policy holders.  Click on the unclaimed funds tab of the respective websites.

·         You have to enter the details of the policy holder in the format given like name, PAN, Aadhar, date of birth of which name and date of birth are mandatory and PAN and Aadhar are optiona.

Only claims above 1000….

To lower the burden on insurance companies, IRDA stated that only those above 1000 rupees need to be published.

What we need to do….

·         You can contact the insurance company immediately after seeing the unclaimed amount or you can follow the directions in the website.

·         IRDA gave a better opportunity to the companies to lower the burden of unclaimed funds by permitting electronic deposit to the policy holders but this has to be more than 10000.

·         There are rules to keep the unclaimed funds online even after 10 years.

Up to 25 years…

·         Most believe that claim cannot be done after the money is diverted to welfare fund but in fact, the claim amount can be taken up to 25 years from the date the fund was diverted to welfare fund.

·         But this fund will go to government after 25 years.