MUMBAI: Life Insurance Corporation of India (LIC) reported unclaimed maturity amounts of Rs880.93 crore in the financial year 2023-24, Parliament was informed on Monday.
This unclaimed amount pertains to 3,72,282 policyholders who did not collect their maturity benefits, Minister of State for Finance Pankaj Chaudhary said in a written reply to the Lok Sabha.
The trend of unclaimed amounts is not new. In the previous fiscal year, Rs815.04 crore linked to 3,73,329 policyholders had remained unclaimed. Furthermore, during FY24, LIC reported that 10 death claims amounting to Rs14 lakh also went unclaimed.
Why unclaimed funds
The phenomenon of unclaimed maturity amounts raises questions about why policyholders fail to claim their dues. Experts cite several reasons, including lack of awareness among policyholders, outdated contact information, and instances where the policyholder’s beneficiaries are unaware of the policy.
Additionally, procedural hurdles or oversight from policyholders themselves may contribute to the issue.LIC said it has taken measures to address this concern.
LIC has initiated awareness campaigns through advertisements in print and digital media, including radio jingles. The corporation has been sending reminders via ordinary and speed post, emails, and SMS.
LIC says the procedures have already been simplified requiring the claimants to produce only valid NEFT details for claim settlement. Agent follow-up has also been strengthened. There are continuous efforts by LIC agents and development officers to contact policyholders and help them claim their amounts.
“Despite these measures, the persistence of unclaimed amounts highlights potential gaps in outreach or procedural barriers, warranting further examination,” said an insurance expert while talking to businessbenchmark.news.
While LIC’s status as the largest life insurer in India makes it a focal point for scrutiny, unclaimed maturity amounts are not exclusive to LIC.
Other life insurance companies also face similar issues, though comprehensive industry-wide data is not readily available. The large number of policies serviced by LIC naturally results in a higher absolute value of unclaimed amounts compared to smaller insurers.
What this implies
The growing unclaimed funds could signal lapses in policyholder communication or inadequate financial literacy among customers.
From a regulatory standpoint, it underscores the importance of stronger mechanisms to ensure rightful claimants receive their dues. It also raises concerns about how such funds are managed and reported by insurers.
For LIC, this could point to the challenges of maintaining effective communication with its vast policyholder base.
However, the trend may also reflect a broader industry issue, suggesting that insurers collectively need to enhance their outreach, simplify claim procedures, and improve beneficiary awareness.
The unclaimed funds ultimately highlight the need for better financial planning and awareness, ensuring policyholders and their beneficiaries understand the claims process and access their rightful entitlements.
