You may have money waiting if a loved one named you on a life insurance policy and then neglected to tell you about it. Unclaimed life insurance policies aren’t as unusual as you would think either.
According to a study by Consumer Reports, 1 out of every 600 people is the beneficiary of an unclaimed life insurance policy with an average benefit of $2,000. It could be like finding out you have a secret savings account.
Life insurers, which paid out $784 billion in benefits in 2018, make efforts to find the rightful owners of unclaimed insurance policies, says Whit Cornman, a spokesman for the American Council of Life Insurers.
“Insurance companies proactively search for beneficiaries; in fact, some companies have whole offices dedicated to that purpose,” he says.
But states want them to try harder.
In recent years, dozens of states have pressured many of the industry’s heavyweights to agree to pay $7.4 billion in unclaimed death benefits. About half the states have put laws on the books requiring insurers to use Social Security data to identify policyholders who have died, and then conduct systematic searches for the insurance beneficiaries.
You may want to do some detective work yourself.
How to find an unclaimed life insurance policy
If you suspect a relative who passed away may indeed have purchased a policy and named you as the beneficiary, try these steps to conduct an unclaimed life insurance policy search. You’ll need the full legal name of your relative, plus it helps to have their Social Security number and any former addresses. Follow these steps to maximize your chances of finding the policy information.
Search for policy paperwork
“If the death occurred fairly recently, check the mail and bank statements for premium payments or policy-related materials,” says Steven Weisbart, senior vice president and chief economist for the trade group the Insurance Information Institute.
If you’re the executor of the deceased’s estate, check any safe-deposit box and go through any personal files. You could also visit the bank of the deceased to request paper statements if you have Power of Attorney. This will allow you to find out who they paid premiums to if you don’t have access to their online account.
Search for the insurance company
If you find evidence of a policy and can identify the insurance company, most of your work is done. Beneficiaries who can’t locate the insurance company listed on a policy should contact their state insurance department.
Meanwhile, if you do have the insurance company, follow its steps to file a claim. Provided you give all the information and the insurance company approves your claim, the company has fewer than 30 days to issue payment.
Look in the correct state
You need to know where the policy was purchased. “Even if your relative died in Ohio, they might have lived in Illinois when they bought life insurance,” notes Jeff Blyskal, Consumer Reports senior editor.
If the insurance company went out of business, the state insurance commissioner should have records of what happened to the policies.
Check with rating services
An insurance rating agency, such as AM Best, could help you track insurers, including those that are defunct.
Search for a financial connection
“If your relative worked with an insurance agent, accountant or financial planner, that person may know what insurance company a life insurance policy was with, even if (the professional) didn’t have anything to do with that particular policy,” Weisbart says. In some instances, this means providing information to verify your identity and that you’re the executor or Power of Attorney of the deceased before the financial professional releases the information.
Turn to a missing policy locator
The National Association of Insurance Commissioners’ Life Insurance Policy Locator Service and similar services allow consumers who believe they are the beneficiary of a life insurance policy to submit a request to have insurers check their files.
Search unclaimed property files
MissingMoney.com, a database endorsed by the National Association of Unclaimed Property Administrators, allows you to search for unclaimed property in most states. To start the search, all you need is the name, city and state where the deceased lived, and you can conduct the research online.
“You should check in the state where you think the policy was purchased, under the name of the policyholder and the name of the unclaimed life insurance beneficiary,” Blyskal says.
Contact the deceased’s former employers
Most life insurance policies purchased through employers are term policies that provide coverage only during the time of employment, but sometimes an individual will continue the policy after leaving the company. You might want to check with former employers, labor unions or professional associations to see which company they had life insurance with so you can contact the insurer directly. Many companies won’t provide specific information pertaining to employees outside of when they worked there and their position, so asking what life insurance company they use is a way around this.
Pay for a search of the MIB database
The MIB (which once stood for Medical Information Bureau) is a cooperative database created by life insurance companies to keep track of insurance applications. “I wouldn’t recommend doing this first, but if you’re pretty certain there’s an insurance policy out there that belongs to you, you can pay a $75 fee for a search,” says Weisbart.
Meanwhile, once you find the insurance company, contact them to see if the policy is still active. If it is, the insurer has steps you can follow to file a claim. It’s vital to follow these directions closely as doing so reduces the chances of your claim being denied or delayed.
Take away a lesson
While it’s too late for deceased relatives to provide you with information on their insurance policies, your relative may have offered a good learning opportunity so the next generation will be spared from hunting down unclaimed life insurance.
If you’re covered by life insurance, tell your family members that you have a policy so they don’t become unclaimed life insurance beneficiaries. Give your insurance company as much detail as possible about your beneficiaries, including names, addresses and Social Security numbers, to make it easier for the insurance company to find them. It’s also a good idea to store life insurance paperwork in a secure place so family members have access to it when they need it.
Frequently asked questions
What happens to unclaimed life insurance money?
Some states are placing pressure on life insurance companies to pay out unclaimed death benefits. Because of this, insurance companies routinely use Social Security data to check to see if policyholders are still alive. When they find out one passed away, they’ll do research to try to find the beneficiaries
How long does a beneficiary have to claim a life insurance policy?
There isn’t a time limit for when you need to file to claim a benefit. However, insurance companies don’t have the same luxury. In many instances, they must pay the claim within 30 days of approval.
Is there a database to look up unclaimed life insurance benefits?
Missing Money has a database that’ll help you see if you have an unclaimed life insurance benefits. All you need is the state name of the policyholder and the state they purchased life insurance in.