Claiming under a life insurance policy when the insured is missing

Every time a natural disaster occurs, be it an earth quake, storm or flood, thousands of individuals go missing and are never found. The current flood in Jammu and Kashmir is an example of the same. There are thousands who have been reported to be missing and families are desperately trying to track down any living members.

The ensuing period after a natural disaster is fraught with questions about the whether these individuals are dead or not. When a person is missing presumed dead, and has an active a life insurance cover, how would insurance companies treat the situation? Life insurance companies offer cover which gets paid when the insured person is dead. Is the missing person treated as dead? If not, how do you claim under a life insurance policy?

Life insurance covers stipulate that the claim would be paid only when the death of the insured is confirmed. Death is always confirmed by the presence of a body. In situations like earthquake and flood the chances of not finding the body is very high and hence the individual would be categorized as missing. As per Section 108 of the Indian Evidence Act, where death is not confirmed by the presence of a body, presumption of death can be made only after seven years from the date the person is reported missing that is the date of filing an FIR. So, in cases where an insured is missing, the nominees or legal heirs have to wait for 7 long years before the said individual is presumed as dead. Only then can they hope to claim any amount under the lifeinsurance cover.

After a person goes missing, the family has to file an FIR with the policy. The date of filing an FIR would be the day when the insured would be deemed to have gone missing. After the lapse of seven years, the nominee or legal heir has to submit the copy of the FIR and the non-traceable report issued by the police along with the court order that presumes the said person as dead for claim settlement, along with other necessary documents as the respective life insurance company may require.

However, there is a situation where the family does not have to wait for 7 years before the missing person is presumed dead. If the concerned government announces the missing as 'presumed dead', the life company will supersede the above mentioned claim procedure of waiting for 7years and getting court order and would settle the claims faster. Such announcements are done by government in the event of large scale natural disasters where the chances of recovering bodies are very slim.

During the flood of Uttarkhand last year, the total death toll exceeded the number of bodies that were found. The then Finance Minister Mr. Chidambaram ordered LIC not to insist on the condition of waiting for the prescribed 7years to settle the claim. We have to wait and see how the government would treat the missing people in the current J&K floods.