As of 2015, there were more than 8,000 people in Singapore who have yet to claim their insurance payouts. Every year there are large amount of unclaimed insurance payouts with The Straits Times reporting an astonishing figure of nearly $2 million in 2001. In 2016, Life Insurance Association of Singapore (LIA Singapore) has launched an online register for members of the public to check on unclaimed insurance payouts. This is an initiative by the government to reduce the amount of unclaimed insurance payouts.
It might seem strange that why would beneficiaries leave money due to them unclaimed. Why would someone reject a windfall? According to many financial advisors in the industry, one of the primary reasons for life insurance payouts to go unclaimed is that beneficiaries of the policies are ignorant and unaware about the claims. Sometimes, financial advisors will come across ‘secret’ buyers. These are the people that buy insurance policies without telling anyone. As financial advisors are bound by strict client confidentiality rules, they will not be able to share the details of the policies with the loved ones of policyholders.
Other reasons include outdated beneficiary particulars. Usually, insurers will first locate beneficiaries via phone call or correspondence to residential address. However, if the contact details of the beneficiary are not updated i.e. change in phone number or they have migrated, it will be challenging for insurers to contact claimants and policyholders that fail to inform their beneficiaries of the claims. Of course insurers will take alternative measures i.e. newspaper advertisements or list proceeds on their websites to reach beneficiaries to the best of their ability.
Also, due to the hustle and bustle of life, it is not uncommon for policyholders that hold multiple plans to forget what they have. In a perfect world, everyone would have their insurance policies organized and files clearly labelled making it easier to keep track of the coverage they have. Unfortunately, we do not live in a perfect world; it is common for someone to hold several policies that we forget about a particular one and stop paying premiums for it. However, this does not necessarily mean that the policy is annulled. For some policies, instead of lapsing, it might merely have a lower coverage plan with lesser payout upon maturity which no one knows about.
Besides relying on LIA Singapore, what can we do on our end to ensure that we do not miss the insurance payout due to our loved ones or ourselves?
1. Ensure all policies are properly documented – It is good practice for policyholder to keep track of their policies and document them in a clear manner. With technology, mobile phones are indispensible. Policyholders can make use of technology i.e. apps on mobile phones to help them store policies in one place. By entering the details of the policies on your mobile phone, you will never have to worry about misplacing the documents for your policies.
2. Share with your loved ones – It is important for your loved ones to know the policies you hold. Many people simply assume that insurers would be able to track their loved ones down if something bad happened to them. Don’t wait till times of crisis before letting your loved ones know. If unfortunate things happen, you probably have enough on your plate and fretting over financial protection should not be one of them.
3. Regular review with your financial advisor – Meeting up with your financial advisor on a regular basis to review your policies helps to prepare you for times of crisis. In addition, it also serves as a reminder for you to update the details of your loved ones if there are any changes so they can be contactable should there be any claims.
It is wise to take pro-active steps to ensure your beneficiaries have one less worry if something happens to you. Download Ottermise today to store and share your financial portfolio with your loved ones! With an online portfolio, your loved ones will not need to frantically search for your insurance policy at a time of deep emotional turmoil. Having a well-documented insurance file both online and offline kept at an accessible place would be helpful for your loved ones during a tough time.