It’s estimated that every year, hundreds of millions of dollars in life insurance proceeds go unclaimed, simply because the beneficiaries don’t know about the policies. What happens to all that money—and how can you prevent your family members from losing out on proceeds they’re entitled to?
Once an insurance company is notified of a policyholder’s death, it is required by law to try to find the beneficiaries of the policy. But according to many government officials charged with overseeing the insurance industry, companies’ efforts are often lax. According to Florida’s Insurance Commissioner, the “failure to search for beneficiaries even though the company has access to death information is a pervasive industry practice.” In the past few years, several major companies, including Prudential and MetLife, have signed agreements with state regulators, paying penalties and promising to do better.
What state regulators want the companies to do is use the Social Security Administration’s Death Master File, an official list of all deaths in this country, updated weekly. According to state officials, some companies use the database to find out when people receiving annuity payments from the companies die (which means the company can stop the payments)—but don’t use it when it would alert them to an obligation to pay out death benefits.
Every state requires insurance companies to turn over unclaimed life insurance proceeds to the state if the beneficiaries can’t be found within a certain period of time, usually a few years. Beneficiaries can always claim the money from the state—billions of dollars sit in state coffers, just waiting.
There’s no one place to go if you think a deceased relative might have left a life insurance policy. But there are a few avenues that might lead to the information you need.
Check the files. When you sort through the deceased person’s papers, look for any correspondence from an insurance company or evidence of checks written for payments, even if they’re decades old. Some policies stay in force long after all the required premiums have been paid.
Check old tax returns. Some life insurance policies pay interest, so you may find evidence of those payments.
Check the mail. If payments were still being made on the policy, eventually you’ll get a bill when the next premium is due. Even if payments aren’t still being made, the company may send periodic statements setting out the value of the policy.
Ask employers or unions. Many people get life insurance through their work or union membership; ask whether any policies were still in effect.
Call the company. If you think your family member had a policy with a particular company, call and ask. If the company has merged with another insurer or changed its name, you can probably get help from your state’s insurance department. You may also find help at the company’s website; MetLIfe, for example, has an online search feature.
Use a policy locator service. The MIB Group has a huge database of policies, which it will search for a fee.
Contact your state. If it’s been more than a year or two since the death, contact the state agency that handles unclaimed property. If you’re not sure where to start, go to the website of the National Association of Unclaimed Property Administrators, which can steer you to the right place.
If you have a life insurance policy (or two), you can keep your family from being one of the millions who have missed out on benefits they had coming. All you need to do is:
Tell the beneficiaries about the policy. Better yet, give them a copy of a statement from the company, so they will have the policy number and contact information when the time comes. If your beneficiaries are children, or you don’t want to give this information to them for any other reason, give it to the person you named as executor in your will.
Leave your records so that they’re easy to find. Your family members may not have any idea about the insurance policies you own. Organize the documents that will let them know what they’re entitled to, and make sure they know where to look.