Kathmandu:Due to insufficient information about life insurance and the insurer’s insufficiency, the insured has not been able to get even the maturity claim payment on time.
Maturity claim must be paid to the insured within 15 days of completion of policy term.After paying all the premiums, at the end of the policy term, the insured receives a lump sum payment of the sum insured and the bonus amount for the insurance term.
However, there are a large number of insured who are unaware of how long after the end of the policy term or by what means the insurance policy claims can be received. This issue persists as the agent provides incomplete and insufficient information at the time of insurance.
Most of the life insurers have not informed the insured even though the insurer has to inform the insured within 15 days from the date of maturity of the insurance policy. This provision is clearly mentioned in The Insurer’s Claim Payment Guideline 2076. But insurers have been completely ignoring this provision for short-term gain.
The insurers have deprived the insured of information about the maturity claim due to the interest income earned by late payment of the maturity claim.It is said that there’s a large amount held by the life insurers against maturity claim payment. The insurers are earning interest income by investing the amount not paid to the insured.
This issue persists with state owned Rastirya Beema Sansthan, private sectors Nepal Life Insurance, LIC Nepal, National Life and Met Life Insurance as these companies have already served from more than 2 decades.
Similarly, the maturity claim of 10 year-term policy of Asian Life Insurance, Prime Life Insurance, Surya Life Insurance and Guransh Life Insurance has also been completed.
The insured does not receive any bonus or interest amount after the maturity date of the policy. Therefore, there is a tendency in insurance companies to pay the amount due to the insured quite lately.
Although there is a provision that the insurer should make provisioning of 115 percent at the end of each financial year to pay the death claim, this rule has not been implemented in the case of maturity claims and money back claims payment.
Insurers have been taking initiative to the Insurance Board by uniting under the umbrella of the Life Insurance Association of Nepal to minimize the benefits available to the insured. They have been able to run the scissors against policy surrender bonus through the Insurance Policy Guideline 2078 issued by the Board. The directive has paved the way for insurers to pay only the bonus amount till the day of surrender. Earlier, the insurers had been paying the bonus amount on an annual basis by calculating the bonus amount and not on a daily basis.
Provision of payment with interest suggested:
If the Insurance Board implements the provision of paying the maturity claim to the insured by adding the interest amount up to the period of non-payment after policy term. The agent suggests to take such initiation to curb the tendency of depriving the insured of information. The minimum interest rate should be fixed by the Insurance Board, said an experienced official in the insurance sector.
It would have been easier for the insured to implement the provision that the first time the insured should be informed via SMS, telephone and email, the second time through the official social network of the company and the information about the outstanding insurance policy should be posted on the company’s website.
We have been informing the concerned insured by publishing the information in the newspapers after the insurance policy maturity, claimed a top level manager of a renowned life insurance company.
KYC update ignored:
Banks and financial institutions have been keeping their customers information updated by regularly updating KYC details. When such details are updated, the bank can easily contact the customer and exchange information. However, insurance companies have not given much priority to filling up or updating customer identification forms except at the time of filling up the insurance proposal form. Such details can be updated at the time of payment of renewal premium. Although it is essential to update customer identities to control money laundering and financial investment in terrorism, this aspect is still neglected in the insurance sector.
As the personal details of the insured are not up-to-date, there is an obstacle in the way of ilensuring the insured to pay the renewal premium, survival benefit or money back payment or maturity claim payment without any hindrance.
Since life insurance is done for a long period of 5 to 25 years, it is highly likely that the background of the insured’s permanent or temporary residence, contact telephone number or email ID, employment, marital status etc. will change.
Provision of Discharge Voucher:
The practice of paying claims directly by the life insurer to the insured or nominee’s account through electronic means has already started. In this case, the insurer has complained that the provision of issuance of ‘physical discharge voucher’ without direct contact with the insured or the person receiving the payment or even with minimal contact is becoming impractical.
The ‘Insurance Claim Payment Guideline 2076’ has a provision to issue a discharge voucher in the name of the person receiving the claim and recieve a signed copy.
It is impractical to implement the rule of cash era in the age of digital payment, Another insurer said, adding that such a provision creates hassle to deliver prompt service through digital means.
Payment of death claim within 15 days:
Guideline 2076 provides for the process of insurance claim, necessary paper proof for insurance claim, time limit for payment of insurance claim, claim discharge voucher.
There is a complaint that the insurer has been harassing the insured by repeatedly asking for paper evidence, despite the provision that the insurer should have settled the claim within 15 days of receiving the insurance claim application. In case of maturity claim, the claim has to be paid within seven days.
There is a provision to lodge a complaint with the Insurance Board for hearing if the insured is not satisfied with the claim payment declared by the insurance company. Even if the insured is not satisfied with the decision made by the Insurance Board,he/she can appeal to the high court.