Life Assurance companies offer a range of savings and investment products designed to help you to meet your financial objectives. You can opt to save regular amounts or to invest a lump sum. A wide range of funds are available which will invest differently depending on how much risk you are comfortable taking with your investment. These products are generally intended to be held for the medium to longer term (2-5 years plus). If you do need to access your money sooner you can do so however charges may apply. You should always take financial advice prior to investing to ensure that you find the right strategy and products for you. Many life assurance companies will have their own advisers who can help.
When you pay into your policy, the life assurance provider invests the money into the agreed investment funds. The value of these polices can fall as well as rise and past performance is not a guarantee of future performance. Since 2001, the value of the growth in your policy is subject to an exit tax. This means that when you withdraw funds, surrender the policy or die, tax at 41% is payable on the difference between the value at the time and the original investment amount. Additionally, the tax is payable every eight years regardless of whether you make any withdrawals. The tax due will be deducted by the insurance company and paid to Revenue – you do not have to take any action.
With all personal life assurance policies there is a 30 day “cooling off” period. This means that you have 30 days to change your mind and cancel your plan and get your money back. For lump sum investments you will get back the original investment less any charges or fall in investment that may have happened while the plan was in place.
It is important that you read the information provided by the life assurance provider so that you understand how your policy works. Your financial adviser can tell you more.
Unclaimed Life Assurance Policies
When is a policy unclaimed?
Under the terms of the Unclaimed Life Assurance Policies Act, 2003, life assurance companies are required to contact the owners of policies with whom they may have lost contact over the years. Affected policyholders will be advised either directly or through general advertisements in the national press. If the policyholder does not reactivate the policy by sending a communication to the insurer in written or electronic form (or by paying a premium), then the policy will be designated as “unclaimed”. The insurer must then transfer the funds in all unclaimed policies to the National Treasury Management Agency, which will manage the funds on behalf of the State.
(However, if the policyholder comes forward at any time, they will still be able to reclaim the full amount that they would have been entitled to receive had the monies remained with the insurance company.)
There is no time limit in the legislation – all unclaimed policies are covered no matter how old. This means that in some cases the persons entitled to receive the policy proceeds may be the heirs of the original policyholders.
What policies are covered?
The Act refers to two types of policies:
- policies which were taken out originally for a fixed term with a lump sum payable at the end of the term. Such policies are “unclaimed” where the policy term expired at least 5 years ago and the insurer has had no communication from the policyholder since the term expired, and
- open-ended policies, which do not have a fixed term and which have a value. Such policies are “unclaimed” where there has been no contact with the policyholder for at least 15 years.
Personal pension policies (i.e. those not linked to an employer’s pension scheme) are also covered by the Act. Such policies are unclaimed where more than 5 years have elapsed, without communication, since the latest retirement date contained in the policy.
Policies will not be considered as “unclaimed” where the policyholder is continuing to pay premiums.
Any policy which has lapsed over the years and has no value is not covered by the Act. Also excluded are employer pension schemes and other types of group insurance as well as policies take out by overseas residents.
Dormant Account Fund
Where a policyholder does not communicate with the insurance company the net encashment value, without further notice to the policyholder, will be transferred to the National Treasury Management Agency (NTMA) on the 30th April each year commencing 2004. However, if the policyholder comes forward at any time after the transfer, they will still be able to reclaim the full amount that they would have been entitled to receive had the monies remained with the insurance company.
Each insurance company will keep a Register of Unclaimed Policies containing policyholders’ details and the date on which the money was transferred to the Fund. If you make a claim in respect of a policy, which has been transferred you will be asked to prove to the satisfaction of the insurer that you are entitled to receive the policy proceeds. The insurance company will then, within 10 working days, request the return of the funds transferred to the NTMA. The NTMA will return the funds to the insurance company within 21 days. The policyholder will then receive the moneys payable under the policy within 5 working days.
What to do if you have an ”unclaimed” policy
If you receive a notification from your insurance company about an unclaimed policy you should respond in writing as quickly as possible and advise the company of your wishes in respect of the policy. You may be asked to provide identification.
Your options in relation to the policy will depend on its terms and conditions. These may include leaving the money invested with the insurer, reactivating the policy or cashing it in.
If you do not receive a notification but believe you have an unclaimed policy you should contact the company concerned. If your enquiry relates to a policy in your own name, providing the information outlined in Part A of the attached Enquiry Form will help the insurer trace your policy and advise you of your options.
If your enquiry relates to a policy taken out by a third party e.g. a deceased relative, then the additional information requested in Part B should also be provided. You will have to produce evidence of your legitimate interest in the policy.
On receipt of the claim form the insurance company may request further information. You will be notified of the outcome of your enquiry as quickly as possible. If your claim is valid, the insurance company will notify you of the following:
(a) the value of the policy
(b) how to access the funds and any other options available to you.
If the insurer is unable to validate your claim you will be notified of the reasons. If you are dissatisfied you may complain through the company’s internal complaints process. If your complaint is not resolved by the insurer you may refer the matter to the Financial Service Ombudsman.
How to trace and insurer
The original life assurance company that initiated your policy may have changed its name, changed its address, been taken over, been amalgamated with another insurance company or closed down. Insurance Ireland will maintain a register of such changes and this can be accessed by ringing 01-6761914 or email iis@insuranceireland.eu.
Insurance Ireland – The Voice of Insurance