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Life insurance companies have meticulous processes in place to ensure that the various benefits are paid out in a timely and smooth manner.

However, have you thought what happens when a benefit is not claimed by the policyholder when it falls due? Or a scenario where the insurance company is not in a position to pay the benefits as the policyholder is unreachable/untraceable or rather still an instance where the insurance company has not been notified about the death of the life insured.

These may look like isolated incidents; however, you would be surprised to know that according to official data, ₹15,166.47 crores was lying unclaimed with 23 life insurers as on March 31, 2018. Of this, ₹10,509 crore was with Life Insurance Corporation of India (LIC), and ₹4,657.45 crores with private insurance companies. Compared to this, for the year 2012-13, Rs 4,865.81 crore was the unclaimed amount for the entire industry. This is a 25 percent increase annually over the past five years in unclaimed money by policyholders. *

Read on to know more.

What Is The Meaning of Unclaimed Benefits?

The following benefits usually form a part of unclaimed benefits:

  • Maturity benefit
  • Money-back proceeds/Survival benefit
  • Death claim proceeds
  • Excess premium which has not been refunded
  • Refund of the amount which is not deposited in the policy

Any such amount which is not claimed for more than six months from the due date of settlement of the claim amount is referred to as unclaimed benefits.

What Are The Reasons For The High Number of Unclaimed Benefits?

Some of the major reasons are:

  1. Changes in The Mailing Address And Contact Details: Many policyholders do not keep the insurance company informed about any changes in their contact details. Thus, the insurance company loses track of these customers. Life insurance is a long-term contract there is a possibility that the agent of the policy is also not with the company when the benefits fall due. It becomes extremely difficult for the company to track down such customers and they need to wait till the customer comes forward to claim his benefits.
  2. Poor Documentation on The Part of The Policyholder: Till the policy is within the premium payment term, the insurance company sends regular intimation to the policyholder by way of premium due alerts, premium receipts, etc which help keep the policy fresh in the mind of the policyholder. However, once the premium payment term is over, the communication and alerts from the insurance company reduce drastically and people who are very busy or dabble in multiple financial products and do not keep proper documentation may just lose track of the existence of the policy. This coupled with changes in contact details can make it very difficult for the insurance company to locate the policyholder and settle his dues till the policyholder or his nominee comes forward to claim the dues. This scenario can occur mostly in single premium and short pay policies where the policy continues for a significant period after the premium payment period is over.
  3. Not Keeping The Nominee/Family Informed About The Policy: A lot of planning and research goes into buying a Life insurance policy. However, your responsibility does not end with buying the perfect plan. You also need to inform your nominee(s) about the policy and where the policy documents are kept so that they can claim it if the need so arises else the entire purpose of buying life insurance is defeated.

There are instances where the policyholder has taken a life insurance policy to protect his family financially in case of his untimely death but has not informed his nominee or family members about the life insurance policy because there is a natural tendency to believe that nothing can happen to us or due to disputes/suspicions/conflicts within the family. In case of the sudden demise of such a policyholder, the nominee or family members will not be in a position to claim as they are unaware of the existence of such a policy.

Read: How Can You Get Maximum Returns In An Endowment Plan?

What Steps Insurance Companies Are Taking To Reduce Unclaimed Benefits?

IRDAI has instructed all insurance companies to make payment for any amounts greater than Rs 10,000/- only through Electronic Clearing Service (ECS) or by NEFT/RTGS directly into the policyholder’s bank account. Also, for those policies which have come into effect post year 2014, the insurance companies need to mandatorily record the bank details at policy issuance itself and make an electronic transfer of funds.

Pension funds were also contributing majorly to the problem of unclaimed funds. Many pension policies had funds that were insufficient to purchase the annuity. Vide it’s circular dated August 3, 2018, IRDAI relaxed the rules on pension products and allowed policyholders to completely withdraw the accumulated amount if it was not sufficient to buy the minimum annuity as per the annuity rules. The circular cited that this was one of the reasons for unclaimed money with the insurance companies.

How Can You Trace Unclaimed Insurance Benefits?

Details of unclaimed benefits are put up on the website of the insurance companies. The policy can be identified by entering a few details of the policyholder such as name, date of birth, PAN number (optional) or the policy number(optional). The insurance companies have to update information about unclaimed amounts on their websites on a half-yearly basis.

If the insurance company’s website shows an unclaimed amount against a policy, the policyholder or beneficiary can approach the company with the policy document and Know your customer (KYC) details. The insurance company may seek additional documents/verification to prevent fraud.

What Happens If The Amount Is Not Claimed By The Policyholder or His Nominees?

As a part of the Finance Act 2015, the government of India introduced the Senior Citizens’ Welfare Fund Act, 2015 (SCWF). Under current rules, all the insurance companies which have unclaimed amounts of policyholders for a period greater than 10 years have to transfer the amount to the Senior Citizens’ Welfare Fund (SCWF). This fund aims at promoting the welfare of our senior citizens.

Further, as per IRDAI, policyholders or their beneficiaries will be eligible to claim the dues towards their policies up to 25 years from the date it is transferred to SCWF by the concerned insurance company. However, if no claimant has come forward up to to a period of 25 years after transfer to the SCWF, then such amounts shall escheat to the Central Government, in terms of Section 126 of the Finance Act, 2015. The policyholder or beneficiaries cannot claim the dues after that.


Unclaimed benefits can be reduced to a large extent if the policyholder updates the insurance company of any changes in his contact details and by keeping the nominee or family informed about the policy. Buying a policy is often seen as a one-time exercise that ends with policy issuance. However, keeping your loved ones informed about the policy, proper documentation and keeping the insurance company informed about your latest contact details will help you/your nominee enjoy the benefits of the policy when it falls due.

Naval Goel is the founder of He is an Associate Member of the Indian Institute of Insurance`, Pune. He has been authorized by IRDA to act as a Principal Officer of Insurance Web Aggregator.
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