How to claim life insurance for missing people?

Mahavir Chopra

‘Gone Girl’ has been one of the best movies I saw this year.

Come to think of it I have thoroughly enjoyed Kahaani, Bourne Identity, Girl with the Dragon Tattoo, Cast Away too. Needless to say, moviemakers and authors are obsessed with the plot of missing people reappearing, and I, with thrillers.

Tragically, in 2014 we also witnessed drama in real life when Malaysian Airways aircraft MH#370 disappeared. Closer home, Srinagar was struck by one of the worst deluges of all times and several people went missing.

Having several years of experience in the insurance industry, I have been often asked as to what happens to a person’s insurance money when he/she goes missing. As 2014 comes to an end, let me help you understand the procedure involved in claiming life insurance for missing people.

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Mahavir Chopra

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1) PRESUMPTION OF DEATH: What is the procedure of ‘declaring’ a missing person dead?For life insurance claims, in the normal case of death, one needs to submit the death certificate issued by the local authorities to the insurance company to make the claim. For missing people since this will not be possible, as per the Indian Evidence Act, one needs to wait for 7 years from the date of filing a missing report (usually the F.I.R. date). After that they need to get a court order for the presumption of death

2) MAKING THE CLAIM: After declaration, how and when is the claim paid?

Once the court order is obtained after 7 years of the person missing, the insurance company processes the claim and releases it. However, the beneficiaries of the life insurance policy or the Insured's family should have been paying the premium to keep the policy alive for those 7 years till the insurance company pays the claim.

3) EXCEPTIONS FOR MAKING A CLAIM: Can the insurance company honor the claim before 7 years?

There are 2 kinds of circumstances when the insurance company can make an exception

a) IN CASE OF REASONABLE PROOF OF LOSS:If there is clear reason or circumstances to believe that death has occurred (in insurance parlance, if there is ‘proof of loss’), insurance companies may release the claim earlier than 7 years also. If the claim amount is very high, or there is a claim in the first few years of taking the Insurance cover, the company will have a thorough discussion and inquiry before releasing the claim. That said, in missing cases, which are not out of natural calamities, it is pretty difficult to get claims out before 7 years, as there is no circumstantial proof of loss.

In most cases when claim is released before the 7-year period, Insurance companies may also ask the customers to issue an indemnity bond, which requires the nominee to return the claimed amount, if the insured member is found alive later, after paying the claim. If the person is found alive after a period of 7 years, then also beneficiaries of the claim amount are liable to pay back the insurance company.

b) IN CASE OF NATURAL DISASTERS/ TERRORIST ACTSIn cases, such as those arising out of natural disaster, terrorist acts or plane crashes, where government authorities have released a list of missing people to be presumed dead, most insurance companies take this into consideration. They override the 7-year clause, and make the claim payment.

Insurance Companies, generally LIC is asked to be lenient by the govt. in their paperwork in case of natural calamities. Like in the case of the Uttarakhand floods in 2013 when the then Finance Minister P. Chidambaram asked LIC, the country’s largest life insurer to not insist on the 7 year clause and sign indemnity bonds so that the claims could be settled quickly.

4) IMPORTANT POINTS TO KEEP IN MIND

a) Normal course of assuming death of a person is 7 yearsb) Beneficiaries need to keep paying the premium on behalf of the missing person till claim is honored. c) In case proof of loss has been obtained out of turn, before 7 years, family may be asked to sign an indemnity bond to return the claim amount in case the missing person returns.

As much as I do love good thrillers, in this case, I wish art didn’t imitate life. With several mass tragedies in 2014, let’s hope 2015 is a more positive one for all of us. Amen!

The author heads health, accident & life insurance at www.coverfox.com