Disappearance cover in Insurance – How to claim for insurance if someone goes missing

There have been notable global incidents in the past which made buzzing headlines leading to the missing of persons. We may think of the disappearance of Malaysian airlines flight MH 370 carrying many passengers and crew members where for a long time the extensive search for the plane was on before it was concluded crashed in in the ocean and all the passengers and the crew dead.

In past, there were numerous acts of god incidents nationally as well, like Jammu and Kashmir floods in 2014 and Chennai cyclone in 2016 where a lot of people were reported missing before either found dead later or returning alive after some time.

Whenever a natural peril like flood, cyclone or earthquake strikes or there is a man-made peril like a terrorist attack there is always a great chance that people may go missing for a long time before finally found dead or alive. In the current article we will discuss the insurance aspects of such cases and provisions made in insurance policies to claim for benefits on behalf of missing persons.

In general insurance, especially in a personal accident policy there is a specific disappearance clause which states if the insured person in whose name the personal accident insurance is taken, disappears for any reason during the policy period and the dead body of him is not found within 12 months of such disappearance and sufficient evidence can be produced to the insurer that before going missing the insured had sustained bodily injury which had resulted to his death, the benefit under the policy promised in case of death will be payable to the nominees under the policy.

The nominees who receive the death benefit under the policy need to provide a self-declaration kind of undertaking that they are liable to return the full benefit paid under the policy if the insured who was presumed dead is found alive later.

In life insurance also there are similar provisions made for filing a claim in case of missing persons. There is a proper way in which one should go about claims related to missing as these are a bit trickier. We present below a few points to clear the issue a bit.

  • For normal life insurance death claim a death certificate issued by the municipality is a sufficient proof for death but in case of missing persons this cannot be obtained. As per Indian evidence act one needs to wait for 7 long years after filing the missing report or related FIR after which a court order should be obtained for Presumption of death.
  • The beneficiaries or the nominees should keep on paying the premium for these 7 years to keep the policy in force otherwise the policy may lapse and no further benefit is payable.
  • If there is circumstantial proof that the missing person is already dead and that can be presented to the insurer with sound reasoning and valid proof, then the insurer may consider waiving off the long wait and settle the claim on the merit of the case.
  • During calamities of national importance, many a times, the government publishes a list of missing persons presumed dead and issues a notice to insurers especially the public sector insurers to settle life and general insurance claims on the basis of the list. Once such an order is received from the government the claims are settled by the insurer quickly without going the long way of waiting for 7 years and obtaining a court order.
  • We have seen such an order by then finance minister at the time of Uttarakhand floods in 2013 and Life insurance corporation of India abiding by the same to settle claims based on the missing list of the government without any paper work and complications. The claim process was made quite smooth for the missing persons.
  • Whether the insurer settles the claim quickly or after obtaining an order from the court, they generally will require an Indemnity bond from the policy beneficiaries which will say that in the case of missing person found alive and returning back the full death benefit paid by the insurer will be returned back.
  • Documents which are generally asked by the insurance companies to settle such claims are
  • Copy of the FIR and the missing report filed with local police
  • Non traceable report issued by local police
  • Original policy copy
  • Indemnity bond duly filled and signed by the beneficiaries or nominees of the policy
  • Court order presuming that the insured is dead
  • Copy of death certificate issued by local municipality

In this age of product innovation instead of keeping the missing insured’s family waiting for long years in financial distress there should be a kind of disappearance clause which is practical and feasible to implement in insurance policies.

The defined terms and condition in the life insurance policy for dealing with claim settlement in cases where the insured goes on missing after a natural or man-made peril will surely make the claims process easier and provide a relief to the dependents.

Insurance in such cases should come as financial saviour and not keep the insurance policy very much rule oriented which may take years to obtain a court order and a death certificate. Obviously the function of the indemnity bond will secure the benefits payments made by the insurer once the missing person is found alive.

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