When it comes to life insurance, ASIC says there was $81 million in unclaimed benefits as of December 2016, when the most recent figures were available.
It’s not necessarily a surprise that life insurance policies can sometimes go unclaimed, given that the person who took out the policy and may be in possession of the documents is rarely the person who would ultimately make a claim. Details of life insurance policies that a person has in place are not always included in a will either, so beneficiaries of a deceased estate may not be aware that they can make a claim.
What is unclaimed life insurance and how does it reach that status?
Generally, when a person who is covered by life insurance dies, or in some cases becomes terminally ill, the policy reaches ‘maturity’. The nominated beneficiary, or another person who can prove eligibility, can then make a claim on the policy.
However, according to ASIC, if the life insurance has not been claimed within seven years of it reaching maturity, the funds become ‘unclaimed’. If this happens, the insurance provider will pass the funds to ASIC. Between the years 2012 and 2015 the timeframe for a life insurance benefit to become ‘unclaimed’ was reduced to three years, but was changed back to seven years starting from 31 December 2015.
Life insurance may be left unclaimed for a range of reasons, such as:
- The beneficiary of the policy may be unaware that there is a policy in place and therefore would not get in touch with the insurer following the death.
- Superannuation can come with life insurance cover included by default, in some cases without the policyholder knowing they are covered. In these cases, the beneficiary might also be unaware that they could make a claim.
- If the beneficiary named on the policy has moved and the insurer hasn’t been informed of the new address, it can make it harder for insurers to track them down.
- The beneficiaries named on the policy may also be deceased by the time the policy matures, making it more difficult for the insurer to locate the person or people that become eligible to make a claim on the policy.
How can you find and claim unclaimed life insurance?
You can find out if you are entitled to any unclaimed life insurance benefits (and other types of unclaimed money) using MoneySmart’s unclaimed money search. ASIC advises that there is no time limit on enquiring about unclaimed money, and that the search database goes as far back as 1952 for life insurance companies and 2000 for friendly societies. Keep in mind that some companies may offer paid services to recover unclaimed money, but the MoneySmart search tool is free to use.
If the search results show that you may be entitled to unclaimed life insurance, you can apply to access the money by first approaching the relevant insurer with your request. It is the insurance company’s responsibility to assess who the rightful beneficiary of the unclaimed funds is.
If the claim is successful, the insurer will notify ASIC, which will then release the funds to the insurer so that they can be paid to the eligible person or people.
According to ASIC’s MoneySmart, you can take the following steps in order to claim your unclaimed life insurance:
- Record your Original Transaction Number (OTN) which is shown when you find your name on ASIC’s unclaimed money search. It is necessary for making a claim.
- Confirm the insurance company details. A list of life insurance companies and friendly societies is available on Moneysmart’s website to help you identify the relevant insurance company and find out who to contact if the original company has changed its name or no longer exists.
- Contact the insurance company and speak to the ‘unclaimed money officer’ to find out what proof of claims documents you may need in order to prove that you’re entitled to the policy benefit.
- The insurance company processes your claim, and if it’s approved, the funds are released by ASIC and paid to the rightful beneficiary.
How long will it take for your claim to be processed?
Exactly how long it will take to process your claim may vary depending on the circumstances. Typically, you would make the initial claim to the relevant insurer and the timeframe may depend on its particular processes.
Once a life insurance company asks ASIC to release unclaimed life insurance funds, ASIC states that it generally takes up to 28 days until the money is sent back to the insurer for payment to the beneficiary.
Is interest paid on unclaimed life insurance?
Starting from 1 July 2013, the federal government began paying interest on unclaimed money held by ASIC, including life insurance benefits. The amount of interest that you may receive and the method of calculation are subject to ASIC’s regulations. The interest rates that are applied can change annually – for example, the interest rate for the 2018/2019 financial period is 1.9%, compared to 2.13% for 2017/2018.
It is important to note that no interest is payable for the period before 1 July 2013.