Life policy and investment proceeds worth R33.5bn unclaimed

Life insurers and unit trust companies are holding some R33.5 billion rand for policyholders, investors and their beneficiaries who have failed to claim their benefits.

This is in addition to R47.3 billion held in retirement funds for members and their beneficiaries, according to statistics released by the Financial Sector Conduct Authority earlier this year.

While the FSCA regulates unpaid benefits in retirement funds in terms of the Pension Funds Act, the Association for Savings and Investment South Africa (ASISA) collects statistics on unpaid benefits from life insurance policies and investments.

Updating its statistics about member companies this week, the association reported that it had united policyholders, beneficiaries, investors and heirs with unclaimed assets worth R22.7 billion in 2021.

The forgotten assets were held in 77 790 risk policies, savings and investment policies, annuity policies and accounts in collective investment scheme (CIS) portfolios, ASISA said.

Most of these benefits were paid out last year in addition to a

Benefits in another 60 837 policies and investment accounts worth R23.8 billion were, however, found to be unclaimed during 2021.  This pushed the total amount held as unclaimed benefits across all ASISA’s member insurers and investment houses to R33.5 billion at the end of last year.

ASISA member companies will entertain claims on old policies at any time - your claim will not prescribe. Read more: For how long can I still claim unpaid benefits from a life policy or investment?

Encouraging beneficiaries to claim

In an attempt to reduce unpaid benefits, FNB Life has started checking monthly against data from the National Population Registry to determine if any of it’s life, credit life cover or funeral policyholders have died.

If the policyholder has named a beneficiary and provided that person's contact details, the insurer then contacts them and encourages them to claim.

So far FNB has paid out R500 million in what it calls pro-active claims paid out since 2018.

Lee Bromfield, CEO of FNB Life, says often the beneficiaries of these policies aren’t aware they are due a benefit.

Update beneficiaries and contact details

To avoid losing out when your investment policies mature or your beneficiaries missing out on benefits due to them after you die:

• Make sure financial institutions have your updated contact details;
• Check regularly who you have nominated as the beneficiary of any policies you own; and
  
  
• Provide ID numbers and contact details for your beneficiaries.

“This will ensure that assets are paid to the rightful owners when they become due,” Rosemary Lightbody, senior policy adviser at ASISA, says.

Incorrect or insufficient beneficiary information, however, makes it difficult to trace those to whom policy benefits are due, Bromfield says.

In most cases, the insurer only has a name or initial and surname with no date of birth, ID number or contact details, he says. Ensure your beneficiary’s full name, as it appears on their identity documents, is included on the nomination form, he adds.

Read more: Why is it important to name beneficiaries on a life policy?

Bromfield says another problem FNB has experienced when contacting potential beneficiaries is that they are suspicious and fear being scammed. 

If someone contacts you about unpaid benefits, you should be on guard and be careful about providing your details. Call the relevant institution on their published numbers to ensure the person who contacts you works there and has legitimately been trying to contact you.

Digital records hard to access

Lightbody says that in a world where policy documents and investment contracts are sent via email and usually stored electronically, it is often extremely difficult for beneficiaries and heirs to find policies and investments when someone dies.

“Without access to someone’s computer or laptop, it is almost impossible to piece together their financial affairs,” she says.

Be sure you share a register of policy details, investment accounts as well as bank accounts with someone trustworthy, whether a relative, close friend, financial adviser or estate planner, Lightbody says.

Keep this register safe together with an up-to-date copy of your will, she says.

Remember group life funeral benefits

Jill Larkan, the head of healthcare consulting at employee benefits company GTC, says you should not forget to name beneficiaries on a funeral policy through a group life cover scheme provided by your employer or as part of your pension or provident fund.

If you do not name a beneficiary, the benefit will be paid into your estate which could take months to wind up, she says.

Read more: How can I find out if I am owed any unpaid benefits from a retirement fund?