Lost policies
If does happen that a claimant will declare that the life policy is lost. The life policy is just evidence that the contract exists but there are other ways in which the life office can trace the existence of the contract from their records. The main concern with a lost policy is that it can be an indication that another party now has an interest in that policy.
The life office will want to make certain that a proper check is undertaken to locate the policy. This will be done with people who might have reason to be holding the policy in safe keeping such as the insured’s bank, building society, solicitors or accountants. The life office will also check its own files and records for an indication of the policies whereabouts. There might have been a letter written in about the policy from someone who had the policy at the time of writing.
If the life office is satisfied that the life policy has been lost then it may require the claimant to sign a statutory declaration statement declaring the circumstances surrounding the loss and to confirm that the life policy has not been assigned to any other party. The life office will also ask the claimant to provide an indemnity to the life office for any losses if another party at a later date then claims legal interest in the life policy. If the claimant is an executor or a trustee they may not be willing to give an indemnity themselves, in which case the beneficiaries may be asked to sign an indemnity.
The life office might not be able to legally require someone to provide them with an indemnity. The indemnity will not stop another party claiming if they hold legal interest. The best the indemnity will do is to provide the life office with the opportunity to recover their loss under the indemnity.
Statutory declarations are made before a magistrate’s court under the Statutory Declarations Act 1835. There are penalties if the declaration is made when the person who makes it knows that the declaration is false.
The lost life policy procedure will also be used for loans and surrenders. Similar procedures will apply to other lost documents such as documents of title, deeds of assignment.
Sometimes a policy holder will ask for a duplicate of the life policy because the original has been lost. Life offices are reluctant to provide a second policy document because this could result in two legal documents being in existence at the same time. The life office may get round this problem by providing details of the policy but not an actual policy, or provide a policy document clearly marked as a copy rather than the legal document itself.
The life office could issue a new policy with a new policy number so long as they could get a clear legally binding discharge with regard to their liability under the old policy. The life office might want to charge for the cost of providing this service.