Unclaimed Life Insurance Proceeds — Nipping the problem in the bud

Life insurance is meant to take care of the financial needs of your loved ones on mortality and maturity events. But what happens when on your demise your loved ones don’t even know that you took out a policy to protect their future in your absence? The purpose of life insurance gets defeated and the proceeds from the policies remain unclaimed!

Now that we have a flavour for unclaimed life insurance proceeds, let’s dig down a bit deeper and understand why the proceeds (from maturity and death) remain unclaimed. Then we can go on to discuss solutions comprising of cure and prevention! Sounds okay?

The root cause — Why Life Insurance Proceeds remain unclaimed? Well, there are broadly two types of life insurance claims i.e. maturity and death claims. The primary reason why both, death and maturity claims, remain unclaimed is that the beneficiaries of the policies or the next of kin don’t even know that the insurance policy existed! The problem is less severe, only marginally though, in case of maturity benefits when the records of the beneficiary are correctly updated in the system. In such case, the maturity benefits get triggered at the time of maturity and reaches the rightful owner of it.

To put things in perspective, in Singapore, proceeds of over 8,000 policies were unclaimed as at September 2015!

The cure — How do I claim the unclaimed? The insurers try their best to track down the beneficiaries, especially in case of maturity claims, to settle the claims. For death claims, they largely depend on the intimation about the mortality event from the beneficiaries and hence are left with little choice. If they are unable to find the rightful owner of the proceeds within 12 months of the event, the details of the policyholders are published on the register of unclaimed insurance proceeds — a register maintained and refreshed by Life Insurance Association (LIA) twice in a year. (Do check out the link in case you think your loved one had a life insurance policy that could have remained unclaimed!)

The problem of unclaimed insurance proceeds is not specific to Singapore and is a global phenomenon. One of the US statistics suggests that one out of four insurance proceeds remain unclaimed! In Singapore itself, in the year 2017, about SGD $10m were paid out with the help of register, which now maintains records of individual life insurance and individual accident and health insurance policies.

The prevention — Can I claim before it becomes unclaimed? This is exactly, we at fidentiaX asked ourselves, and developed ISLEY, a blockchain powered digital ledger for your insurance policies. ISLEY equips you to upload your policies in confidence with blockchain technology and extend access of it to the loved ones to act upon maturity and mortality events. Isn’t this powerful? The good news is that ISLEY is a lot more powerful and can help you manage your insurance portfolio spanning across types of insurance products, companies and countries! Additionally, the underlying blockchain technology ensures that your confidential details remain secured and gives you complete control on who can access the information.

To summarize, it is strongly recommended to maintain a policy ledger of insurance policies and extend the access of it to your loved ones. You have taken the wise step of buying insurance policies to protect the future of your loved ones, take one more step and let them know of the policies. This way we can nip the problem of unclaimed insurance proceeds in the bud!

I sincerely hope you found the article useful and now appreciate the importance of maintaining a policy ledger for insurance policies. In the next few weeks, I would write articles to share more about ISLEY. Stay tuned! Meanwhile, I look forward to your feedback and questions. Please send them to hello@fidentiaX.com. And of course, I would be live on Twitter to answer any life insurance related queries at 8 PM Singapore time on 15-October-2018 i.e. this Monday!

PS: The info version of ISLEY is already available for Android phones and should be in App Store shortly!

Disclaimer: The article has been written with an aim to broadly explain an otherwise complicated and technical topic for readers with little or no insurance background. Hence, it doesn’t have finer details but is still broadly correct. The readers are recommended to take advise from their respective financial advisers before taking any financial decision.

About the writer: Mr Sumit Ramani is the Chief Actuary of fidentiaX. He is a qualified Life actuary and a computer science engineer with over a decade of experience in (re)insurance business with focus on modelling of life and health products, peer review and business analysis.