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Aadhaar linking with insurance policies-several advantages for policyholders?

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Even as government has announced the timeline to link Aadhaar details with financial services from 31st December 2017 to 31st March 2018

-policholders needs to mandatory do it before the end of this financial year. Earlier the Insurance Regulatory and Development Authority of India (Irdai) had announced to link Aadhaar with insurance policies. There are several concerns raised by many people on compulsory linkage of Aadhar with financial products. But, advantages outweigh the apprehensions as policyholders might reap the final benefits of this exercise.

Is it only for insurance policies?

No, in the recent past we have seen government making it mandatory for consumers to link many important services with Aadhaar. Customers might be getting frequent reminders to link their banks account, mutual fund and mobile number with Aadhaar. Recently, the Reserve Bank of India also clarified that it is mandatory to link bank accounts with Aadhaar. With this linking of Aadhaar, fake claims arising in insurance sector might come down which could eventually benefit policyholder. Even the government claims to have removed millions of fake beneficiaries for government benefits by Aadhaar linking. As reported in various media, over 22-23 million fake ration cards have been scrapped, potentially saving the government Rs14,000 crore in food subsidy every year. While three states discovered that about 2.7 lakh fake students were availing the mid-day meal (MDM) scheme due to the Aadhaar.

Impact of linking Aadhaar with insurance policies and its advantages

Insurance regulator had stated that linking of Aadhaar number to insurance policies is mandatory under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017. As said earlier linking of Aadhaar with insurance policies has numerous benefits like cleaning out duplications and fake policies and provides accurate data. It is very important to note that, insurance frauds have cost industry over Rs 10,000 crore annually, suggest the figures. Linking of Aadhaar with financial services will help eradicate fake accounts and fake insurance policies.

In Indian insurance industry there are many fraudulent activities like accounts opened with fake signatures or duplications in PAN. Due to the surge in such activities there are many areas in state like Gujarat, Karnataka and Haryana where insurance companies take utmost care while giving a policy. With this linking of Aadhaar, such duplicity will reduce, and fake claims might come down for industry which could eventually benefit policyholder. Apart from this issue, many times insurance companies face problems while paying out the claims or when the policy gets matured. Policyholder sometimes forgets to update the change in address or bank accounts which would result is non-payment of claims. This exercise will ensure that, maturity proceeds are directly transferred to the banks account of the policyholder when policy gets matured.

Few obstacles in the process

On the flip side, there are many arguments that, linking of such services will lead to having all information on an individual at a single place, which could make surveillance easier and increase the risks if this information is hacked. However, with direction from the regulator, policyholders needs to complete the procedure in time as insurance companies will require Aadhaar linkage, during renewals or during claims registrations.  The insurer can also keep in waiting the claim payments until the linkage and authentication has been completed. So, it is advised for policyholders to complete the process at the earliest to avoid any future difficulties while getting the maturity proceeds.

The Aadhaar linking is applicable for all the life as well as non-life insurance companies. This move will create a combined platform for all the financial services and also strengthen government’s digitization initiative. Though, the procedure may be tiring initially, but in the long run will provide unprecedented benefits by preventing fraudulent acts and streamlining all the KYC process.

Process to link Aadhaar with your insurance policies

As discussed above in the article, linking insurance policy with the 12-digit unique identification number is compulsory now. The insurance regulator has made Aadhaar and PAN/Form 60 linking mandatory for availing any financial service. Irdai has directed all the insurance companies to link the new and existing insurance policies to the Aadhar number, without any delay. Failing to complete the procedure may propel insures to hold the claim until the linking is complete. However still there is no clarity on this issue. There are three ways to link Aadhar with an insurance including online, offline and text messaging.

Linking through online mode

This is most convenient and easy way to link your insurance policy with Aadhaar.

Step 1: For registered users (who are paying premiums online) they should visit the insurance company’s portal.

Step 2: Give the exact Aadhaar details as mentioned by the insurance companies, re-check the number and submit

Step 3: One time password will be generated on the Aadhar registered mobile number, put the password and Aadhar will be linked with the policy

However for policyholders who are not registered, they just need to give extra details like PAN, date of birth, e-mail id, policy number and Aadhaar number in the Step 2. All the other steps remains same.

Linking through offline mode  

For any reason if you can do online linking, here how you can link your policies offline. One needs to have, Aadhaar or PAN mandate form, self-attested copy of Aadhaar card and PAN Card or Form 60and policy number. To get the form you can get in touch with our representative at Probus or can download from the website of insurance companies. After filling the form, you can submit this Aadhaar / PAN Mandate Form along with a self-attested copy of Aadhaar card and PAN Card / Form 60 at the nearest Branch or at Probus office for linking your policies. A self attested copy of Aadhaar needs to be furnished to complete the process.

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