Interest on late payment of claims

There is a guideline by the Life Insurance Association which requires a life insurer to pay interest on late payment of maturity and death claims.

The interest is payable if the claim is settled more than two months from the date of receipt of written notification of the death. For an endowment policy, interest is payable if payment is made more than two months from date of maturity.

The interest is calculated based on the 12-month Fixed Deposit rate and savings rates of major local banks, weighted in the ratio of 80:20. It is calculated from the date to the date of payment.