Consumers must keep their contact details up to date to avoid their life insurance becoming part of the billions of rands in unclaimed benefits.
South Africa had R88.56 billion in unclaimed benefits in 2022, with unclaimed life insurance benefits making up 38% of the total according to the Financial Sector Conduct Authority.
The Association for Savings and Investment South Africa (ASISA) categorises assets as unclaimed if attempts to contact the main member or beneficiary yielded no results after a maximum of three years.
“Despite industry-wide initiatives to trace the beneficiaries and owners of unclaimed benefits, the quantum of unclaimed assets continues to rise annually,” Avinash Baboolal, senior claims manager at Hollard Life Solutions, says.
Baboolal says the primary cause of unclaimed benefits is usually outdated contact details, where policyholders unintentionally neglected to update their contact information as their lives changed. The consequences are significant as policyholders miss out on their benefits and beneficiaries are left unaware of their entitlements.
“These funds could make a significant difference to the lives of the beneficiaries, particularly in times of distress and hardship.”
The initial approach at Hollard Life Solutions is to contact policyholders or beneficiaries using available system contact information. If that is unsuccessful, third-party verification tools are used to source the most up-to-date information. In cases where contact remains elusive, tracing agents are approved to step in to collect the necessary information for a claim payout.
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Unclaimed benefits a complex issue for insurers
“Managing unclaimed assets can be complex, particularly when the primary policyholder has passed away and beneficiaries are unaware of their entitlements. Therefore, it is important for policyholders to prioritise updating their personal details and beneficiary nominations annually and work collaboratively with their insurers to ensure effective record keeping.”
“We want to make sure that all valid claims are paid. In the case of unclaimed benefits, we follow thorough evidence-based assessment criteria, given the timelapse on these claims. The process is fair and transparent and it seeks to authenticate the identity of the claimants.”
ASISA requires that when all reasonable attempts to trace the customer, heir, or beneficiary have been exhausted and in the case of life policies, release assets from the reserve backing an unclaimed benefit, should not be paid to shareholders or treated as income but should be invested in socially responsible activities.
That investment should be in an appropriate vehicle within the context of South Africa’s social development needs, mainly in high social impact funds with commercial returns, such as industry initiatives and/or Enterprise Supplier Development Funds.
However, this does not apply in the case of risk policies such as annuities, where the payment of the benefit ceases on the death of the policyholder or beneficiary.
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Retaining unclaimed benefits
Baboolal says while different insurers have varying protocols for retaining unclaimed benefits, Hollard Life Solutions preserves unclaimed benefits after the benefit has been deemed unclaimed. During this time, the assets are held in an interest-bearing account to safeguard the interests of potential beneficiaries in the event of a subsequent claim.
“Unclaimed benefits do not become the property of Hollard Life Solutions. The right of policyholders to the unclaimed asset persists until the claim is settled, irrespective of the timeframe.”
Consumers who believe they may have unclaimed benefits are encouraged to contact their insurer or broker. This process may present added complexity for beneficiaries who are unaware of their nomination for benefits.
In these cases, Hollard Life Insurance advises beneficiaries to contact insurance companies directly to ascertain whether their loved ones had policies with them. The process may be easier to facilitate if they have any of the policy documents.