There were over $7.4 billion in unclaimed life insurance payouts in 2016, according to a report by USA Today. If you suspect you may be a beneficiary, there are several ways to find out if you’re owed a payout — and state insurance departments and national insurance associations can be a huge help.
As for how to find a life insurance policy, your first step should be to check any records the person may have kept, like financial statements.
If that doesn’t work, here’s how to find the deceased person’s life insurance policy:
Life insurance companies can’t keep unclaimed death benefits forever, and the state laws on unclaimed property vary. Generally, insurers must turn over the proceeds to the state in which the policyholder resided after a certain number of years have passed.
Once you’ve found an unpaid benefit, it’s up to you to begin the claims process. These are the steps:
Life insurance companies have no legal obligation to let beneficiaries know when they’re owed a payout.
However, most insurers use tracking technologies — like the Social Security Administration’s Death Master File — to confirm whether a policyholder has died, according to the Insurance Information Institute. They may then search for beneficiaries.
But if you think you’re owed a death benefit, it’ll probably be quicker for you to initiate the claim yourself.
It’s possible to be a beneficiary and not know it. Some individuals take out life insurance through an employer plan and don’t notify those who they list as beneficiaries, and others simply choose not to tell.
The NAIC is working on legislation that would require insurers to check if any policyholders have passed away and left benefits unclaimed. But for now, it’s usually up to the beneficiary to file a claim. Be sure to carefully investigate records and check for unclaimed property rather than assuming someone will contact you about it.
Most permanent life insurance policies have a “limiting age” of 121. At this point, it’s up to the policyholder to claim their cash value. After three years, if the insurer hasn’t had any contact with the policyholder and there’s been no claim, most states require insurers to turn over the policy’s proceeds as unclaimed property.
State laws vary, but typically insurers get 30 days for claim review. Check that you have all the necessary requested documentation when you file to reduce the time it takes.
If the funds have already gone to the state, it’ll also be different by location. For example, it can take six to eight weeks to process a claim in Alabama, whereas Washington state has a typical turnaround time of 30 days.
Insurance companies aren’t likely to reach out when death benefits go unclaimed, so it’s up to you to find out if your loved one had a policy. Once you’ve looked through any records left behind, you can work with the NAIC or your state’s department of insurance to confirm whether you’re owed a payout.
When you’re doing your own estate planning, carefully compare your life insurance options and inform your beneficiaries once you’ve signed off a policy.
Do unclaimed life insurance policies accrue interest?
Yes, it’s possible for an unclaimed death benefit to accrue interest. The type of benefit and insurer will affect if it attracts interest or not.
What happens to unclaimed life insurance policies?
Unclaimed benefits are eventually sent to the state where the policy was held. The state then holds onto the funds until they’re claimed.
How can I make sure my beneficiaries are paid out?
Let your beneficiaries know when you’ve listed them oa life insurance policy, and keep detailed records of it to make it easy for them to file a claim when the time comes.
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