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Unclaimed Insurance Money Will Be Reduced By Electronic Transfer

Now Unclaimed Insurance Money Will Be Reduced By Electronic TransferIncreased from Rs. 1,372.64 crore in financial year 2010 to Rs. 4,865.81 by FY13, almost Rs. 5,000 crore unclaimed amount is lying with insurance companies. This amount is only increasing. According to Insurance Regulatory and Development Authority (Irda), this total increase is of more than 200% and an annual increase of about 52%. This has clearly worried Irda, so to plug this increase, the settlements such as maturity benefits or insurance claims are mandated to be done through electronic transfers only. But the major worry is that why policyholders are not claiming their insurance benefits.

Reasons for this delay

The settlement of an insurance claim or maturity amount like in life insurance plans which have an investment component is done through demand drafts and cheques according to Irda. Clearance of these plans can be time taking. It may also lead to rejection in case they are not time bound. In many cases, the dependants of the policyholder are unaware of the policy so they don't go for a claim. One more reason for pending claims is change of address.

So, to solve these problems, an electronic insurance account has been introduced which digitized policies and all the policies can be held in one account. You can also keep your address updated with the help of this new technology and the nominees of your policy can find the policies at one location. The nominees should also be informed about the insurance while purchasing one.

New rules for e-transfer of money

Irda has made it mandatory to forward proceeds of all the claims through electronic mode only from the next fiscal to make the settlements quick and direct. The insurer along with documentary proofs will also have to collect bank details as electronic clearance is mandatory for all new policyholders from now, while it is optional for existing life policyholders. Policyholders are needed to be informed about this option in the next six months by the insurer. The insurer will need bank details of the nominee as well to pay the death claims. The insurer has an option to pay by cheque in case the payment doesn't exceed Rs. 25, 000 for a non-life insurance policy or Rs. 10, 000 for a life insurance policy.

Written By: PolicyBazaar - Updated: 27 January 2021
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