In a startling revelation that sheds light on the complexities of the life insurance sector in India, a significant number of life insurance policies remain unclaimed or get rejected each year, leaving beneficiaries without the financial safety net they were promised.
Recent data from the Insurance Regulatory and Development Authority of India (IRDAI) highlights that a staggering amount of life insurance money goes unclaimed. As of the end of the last fiscal year, unclaimed insurance amounts have swelled to over INR 15,000 crores, an increase that underscores a worrying trend in the Indian insurance sector.
The reasons behind these unclaimed policies are manifold. A primary factor is the lack of awareness among policyholders and their nominees about the policy details and the claim process. In many instances, beneficiaries are unaware of the existence of a policy, while in others, they find the claim process cumbersome and daunting.
Moreover, a significant number of claims get rejected due to discrepancies in the information provided at the time of purchasing the policy or non-disclosure of critical information such as pre-existing medical conditions. According to industry estimates, the claim rejection rate in India stands at about 1%, which, though seemingly small, translates to a substantial number considering the vast number of policies in play.
The IRDAI has taken several steps to address this issue, including mandating insurance companies to find the rightful claimants for unclaimed amounts and simplifying the claim settlement process. Insurance companies are now increasingly adopting digital tools and awareness campaigns to educate policyholders and their families about the importance of updating nominee details and understanding the claim process.
Experts suggest that policyholders should regularly review and update their insurance details, ensure that nominees are aware of the policies, and maintain proper documentation to avoid claim rejection. Moreover, the integration of technology in the insurance sector is expected to play a pivotal role in enhancing transparency and easing the claim process, thereby reducing the number of unclaimed and rejected policies.
The unclaimed and rejected policies in the Indian life insurance sector represent a wake-up call for both the industry and policyholders. With concerted efforts from regulatory bodies, insurance companies, and policyholders, there is hope that the benefits of life insurance can be fully realized, ensuring that no policyholder’s family is left in the lurch.