Claiming life insurance for a missing person

In case of a natural calamity or a terrorist attack, the claim settlement period can be waived off

During a natural calamity, be it a storm, flood or an earthquake, hundreds of individuals are affected. Consider the floods in Jammu and Kashmir in 2014 or the Malaysian Airlines Flight MH370 which went missing in 2014 or the Chennai cyclone in 2016, losing a loved one, especially if one goes missing to such a calamity/disaster, could traumatise anyone.

While the loss of a loved one cannot be compensated/replace through that financial support, it is a part of a support system, nonetheless. The process, thankfully, is not as complicated as one would imagine. But one needs to take all these steps for a 

smooth process:

Presumption of death: How does one go about the process of ‘declaring’ a particular missing person as dead? The process of life insurance claim for a natural death is not too complicated. This is because one has to only submit the death certificate of the insured, along with certain other documents to the insurance company. However, for missing people, this isn’t possible. According to the Indian Evidence Act, Section 108, presumptions of death can be made only after seven years from the date of the person has been reported as missing, that is, date of filing the First Information Report (FIR). This goes without saying that filing an FIR for the missing individual as soon as possible is important.

Assuming the insured is missing in such situations like a cyclone or any other natural calamity, the legal heir or nominee of the insured has to wait for a period of seven years before they can receive any claims.

Filing the claim: How and when is the claim paid? After acquiring the death certificate, the court order needs to be obtained. The court releases an order to the insurance company seven years after the insured person went missing. The insurance company, then, starts with the claim procedure and releases it. The only drawback: the nominee or the beneficiaries of the insured should have been making regular payments of the premium for seven years just to keep the life insurance policy active.

Procedure: The family member of the insured has to file an FIR and provide this information to the insurance company as the date of filing the FIR would be considered as the date when the insured would be deemed to have gone missing. And, after a period of seven years, the nominee or legal heir of the insured needs to submit the below documents to the insurance company.

• Copy of FIR
• Non-traceable report issued by the police
• Court order that presumes that the insured is dead
• Along with other documents as mentioned (below) by the insurance companies

Documents required:

• Claimant’s statement form signed by the nominee of the legal heir
• Copy of the FIR and the missing person report filed with the police
• Original policy contract documents or indemnity bond
• Copy of death certificate
• Court order presuming the person is dead after the lapse of seven years

Does the insurance company honour the claim before seven years? There are two kinds of circumstances when the insurance company can make an exception. For one, if there is reasonable proof of loss. An insurance company may settle the claim before seven years also, provided there are clear circumstances for the death occurrence. 

In case the life insurance claim is too high, or if the claim has been intimated in the beginning few years of buying the insurance cover, the insurance company would investigate minute details and do a thorough discussion before discharging the claim amount to the nominee of the missing person. Since there is no incidental proof of the loss for missing cases due to natural calamities like floods, earthquakes, drought, etc; it becomes very difficult to release the claims before seven years.

An indemnity bond is asked from the customers by the insurance companies to release the claim before the seven-year period. However, if the missed insured person is later found alive, the insurance company could ask the nominee to return the funds paid as the claim amount.

Another situation can be when there is a terrorist act or natural calamity. During natural calamities like floods, earthquakes, plane crashes, terrorist attacks, etc, the government releases a list that mentions the missing people assumed dead. The insurance companies mostly take such list into consideration, thereby overriding the seven-year clause for settling the claim.

During Uttarakhand flood in the year 2013, the Finance Minster P Chidambaram, had asked Life Insurance Corporation of India, the country’s largest life insurer, not to insist on the seven-year clause to presume the insured as dead and sign indemnity bonds so that the claims could be settled quickly.

In the face of a tragedy, it is only human to skip informing the insurance company about the insured missing person from one’s family. However, the sooner one informs the insurance company about the missing person, the lesser number of hurdles come in the way of making the life insurance claim later on. Just keep in mind that the nominee of the life insurance policy would be required to pay premiums on behalf of the missing insured person, till the claim is settled.

For an individual purchasing life insurance policy for their respective family, it is prudent to educate the nominee and family members too about the process involved in claiming a life insurance in such scenarios.

The author is director, health, life & strategic initiatives, Coverfox.com