LIC has Rs 21,300 Cr 'unclaimed insurance money' lying in their kitty

Hyderabad: More than Rs 21,330 Crore of 'unclaimed' money is lying with the Life Insurance Corporation of India (LIC), Minister of State for Finance Dr. Bhagwat Karad said. Besides, Rs 1,255.66 Crore has been transferred to the Senior Citizen Welfare Fund (SCWF), as unclaimed money was lying with the LIC for over 10 years.

This fund is used for promoting the welfare of Indian senior citizens. Under rules, if no claim is made for 25 years after the transfer to the Senior Citizens Welfare Fund, the money goes into the kitty of the Central Government. It is to note that two-third of the total unclaimed money lies with India's biggest life insurer. There are a total of 23 private players in the insurance sector.

"Regarding unclaimed funds available with LIC. officials of the board in LIC have informed that as of 31 December 2021, it has an outstanding unclaimed (for a period not exceeding ten years) amount of Rs.21,336.28 crore under individual and group business policies," the minister told Rajya Sabha.

What does the rule book say?

An outstanding amount lying in 'unclaimed accounts' are settled in favor of policyholders or claimants after receiving a claim request. In case, no claimant comes forward for the money, the unclaimed insurance goes into the bank account of the Senior Citizens' Welfare Fund (SCWF)

As per the provisions of Senior Citizens' Welfare Fund Rules, 2016, and a Master Circular of Insurance Regulatory and Development Authority, all insurers, including LIC, who have unclaimed amounts of policyholders for more than 10 years as of 30th September-2017 are required to transfer the same with interest to the Senior Citizens' Welfare Fund (SCWF) every year.

But, here is a condition. Even after the transfer of the unclaimed amounts to the Fund, a policyholder or claimant continues to be eligible for claim under their respective policies for a period of up to 25 years.

What is LIC doing to reach out to policymakers?

The LIC claims that all its branches have been asked to follow up on the outstanding amounts and inform the respective policyholders Further, unclaimed amounts have been displayed on its website, where policyholders / legal heirs can check the unclaimed amounts on the website against their policy number.

Table:

Unclaimed amount paid to policyholders / legal heirs after its transfer to SCWF. The table is from the 12-month period ending

30th September 2018: RS 4.6 Lakh

30th September 2019: Rs 1.61 Crore

30 September 2020: Rs 1.51 Crore

30 September 2021: Rs 8.08 Crore