Want your Insurance Claim to be Processed? Link your Aadhaar/PAN ASAP

Insurance serves as a safety net, offering financial security and peace of mind during uncertain times. Whether it's life insurance, health insurance, or vehicle insurance, we expect our claims to be processed quickly and without complications. However, many policyholders face delays, rejections, and frustrating back-and-forth communication with their insurers when trying to settle claims.

A common but often overlooked reason for these issues is the failure to link Aadhaar and PAN with the insurance policy. The Insurance Regulatory and Development Authority of India (IRDAI) has made it mandatory to link Aadhaar and PAN to insurance policies to ensure smoother and faster claim settlements. If you haven’t yet linked your Aadhaar and PAN with your insurance policy, you could be setting yourself up for unnecessary trouble down the line.

In this post, we’ll explore why linking Aadhaar and PAN is essential for insurance claims, the consequences of not doing so, and a step-by-step guide on how to complete the linking process effortlessly.

Why Aadhaar and PAN Linking is Important for Insurance Claims

1. Regulatory Mandates

The IRDAI, which regulates the insurance sector in India, has issued clear guidelines on linking Aadhaar and PAN to insurance policies. This move stems from the government’s broader goal of promoting transparency, preventing fraud, and ensuring that the financial system is secure.

Linking Aadhaar and PAN is part of the Know Your Customer (KYC) norms that insurers are legally required to follow. KYC helps insurance companies verify the identity of policyholders, reduce the risk of financial crimes, and comply with anti-money laundering (AML) regulations.

Without proper KYC compliance, your insurance policy may be flagged as incomplete, which can lead to complications when filing a claim.

2. Prevention of Fraud

Insurance fraud is a growing problem in India. Fraudulent claims, identity theft, and fake beneficiaries have cost insurance companies billions of rupees. By linking Aadhaar and PAN, insurers can cross-verify details across government databases, reducing the chances of fraudulent claims.

For example, if a fraudster attempts to file a health insurance claim using fake identity details, the insurer can quickly detect the discrepancy by verifying the Aadhaar and PAN information. This not only protects insurers but also ensures that legitimate policyholders receive their rightful benefits without undue delays.

3. Faster Processing and Verification

When Aadhaar and PAN are linked, insurers can automatically verify the policyholder’s identity and bank account details. This significantly reduces the time spent on manual verification and paperwork.

Imagine you’ve filed a health insurance claim for a hospital stay. If your Aadhaar and PAN are already linked, the insurer can instantly match the details with government records and approve the claim faster. On the other hand, if the details are missing or mismatched, the claim could be delayed for weeks while additional verification is conducted.

Consequences of Not Linking Aadhaar and PAN

Failing to link your Aadhaar and PAN to your insurance policy can lead to serious complications. Here’s what could happen if you don’t comply:

1. Delayed or Rejected Claims

Without proper KYC verification, insurers are legally bound to delay or reject claims. If the insurer cannot verify your identity or match the bank account details for the payout, they may be forced to put the claim on hold.

Example:
Ravi, a policyholder, filed a life insurance claim after the death of his father. However, since the Aadhaar and PAN were not linked to the policy, the insurer couldn’t verify the nominee’s identity and bank details, causing a significant delay in the payout.

2. Tax Implications

According to the Income Tax Act, if your PAN is not linked to your insurance policy, the insurer is required to deduct Tax Deducted at Source (TDS) at a higher rate.

• If PAN is linked – TDS is deducted at 5% on insurance payouts exceeding ₹1 lakh.
• If PAN is NOT linked – TDS is deducted at 20% on insurance payouts.

Example:
Priya received a maturity payout of ₹2 lakh from her life insurance policy. Since her PAN was not linked, the insurer deducted ₹40,000 as TDS instead of ₹10,000 – causing her to lose ₹30,000 unnecessarily.

3. Policy Lapse and Termination

Insurers may refuse to renew or continue a policy if KYC norms are not met. In some cases, the policy may be terminated altogether due to incomplete documentation.

How to Link Aadhaar and PAN with Your Insurance Policy

Linking your Aadhaar and PAN to your insurance policy is a straightforward process. Here’s how you can do it:

1. Online Linking via the Insurer’s Website

1. Visit your insurer’s official website.
2. Log into your account using your policy number and registered phone number.
3. Navigate to the "KYC Update" or "Profile" section.
4. Enter your Aadhaar and PAN details.
5. Submit the details and wait for confirmation.

2. Offline Linking

1. Visit the nearest branch office of your insurer.
2. Carry a self-attested copy of your Aadhaar and PAN cards.
3. Fill out a KYC update form.
4. Submit the documents to the customer service executive.
5. You will receive an SMS confirmation once the linking is complete.

3. Linking Through Mobile Apps

• Most major insurers have mobile apps that allow easy Aadhaar and PAN linking.
• Log into the app and look for the “KYC Update” or “Profile” section.
• Enter the Aadhaar and PAN details, and submit.
• You’ll receive an update once the linking is successful.

Common Issues and How to Fix Them

✅ Mismatch of Name or Date of Birth – Update the details in your Aadhaar or PAN through the respective government portals.
✅ Incorrect Linking Status – Check the status directly with your insurer or through the customer service helpline.
✅ Technical Errors – Try linking again after some time or use an alternate method (offline or through the app).

Government and IRDAI Guidelines on Aadhaar and PAN Linking

• The IRDAI has made Aadhaar and PAN linking mandatory under the Prevention of Money Laundering Act (PMLA), 2002.
• Insurers must verify KYC details at the time of policy issuance and claim processing.
• Non-compliance with these guidelines can lead to penalties and claim rejections.

FAQs and Common Concerns

👉 What if I don’t have a PAN or Aadhaar?

• Apply for Aadhaar or PAN at the nearest enrollment center or online.

👉 Can I link Aadhaar without PAN?

• No, both Aadhaar and PAN are mandatory for full KYC compliance.

👉 What happens if the linking fails?

• Contact your insurer for assistance or update the details through the Aadhaar or PAN portal.

Benefits of Linking Aadhaar and PAN for Insurance Claims

✅ Hassle-Free Claim Settlement – Faster and smoother processing.
✅ Lower Tax Deductions – Avoid higher TDS rates.
✅ Protection Against Fraud – Secure your policy from fraudulent claims.
✅ Easy Tracking and Management – View all linked policies in one place.

Linking your Aadhaar and PAN with your insurance policy is no longer optional—it’s a necessity. Ensuring that your KYC details are up-to-date will help you avoid delays, higher taxes, and claim rejections. The process is simple and can be completed online, offline, or through your insurer’s app in just a few minutes.

Don’t wait! Link your Aadhaar and PAN today and enjoy stress-free insurance claim settlements tomorrow