New rules about unclaimed insurance money
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According to the Insurance Regulatory and Development Authority of India’s (Irdai) circular, which was released on 25 July, unclaimed monies of insurance companies will move to the Senior Citizens Welfare Fund, which has been created by the government, 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.
Here we explain what unclaimed money in insurance is and what you can do to claim it.
What is unclaimed money?
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 beneficiary if she makes a claim in the future. Any penalty 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. Click the tab and on the page that opens, enter the details such as name of the policyholder, policy number, Permanent Account Number (PAN), Aadhaar number and date of birth to know details of any unclaimed amount. The policyholder’s name and date of birth are compulsory fields, whereas PAN and policy number can be optional. 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.
How to claim
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.
Do note that 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.