There is significant evidence that shows
that billions of dollars in life insurance benefits go unclaimed on an annual
basis. In fact, in February of 2011 the New
York Times indicated that millions (and perhaps billions) of dollars in
unclaimed insurance benefits are turned over every day to states. When a
policyholder dies, the insurance company must be notified of the death in order
for them to begin the process of redeeming death benefits and paying them to
the proper beneficiaries.
However, all too often, beneficiaries
are not aware that there is an existing policy. When an insurer does not hear
from a policyholder, they will eventually turn the property over to the state
as unclaimed property. This means that beneficiaries need to know how to
located unclaimed insurance benefits. Here are some tips for making sure
that life insurance policies are not overlooked.
Review checkbooks and mail
Dealing with the loss of a loved one
involves high levels of stress and often little things get overlooked. One of
the first things that can be done to help prevent unclaimed insurance benefits
is to review bank statements, checkbooks and recent mail. Policyholders are
often paying a monthly or quarterly premium for life insurance that may be
identifiable from either bank statements or from cancelled checks. Insurance
companies may also send an annual statement or mail a premium due notification.
It is generally a good idea to have all mail forwarded to a responsible
person immediately after death as this would help identify any premiums due.
Many people have their homeowner’s
policy, life insurance policy and other insurance policies with the same agent.
This can be very helpful as the agent may be aware of life insurance policies
that were in effect. Many life insurance companies ask on applications if the
policyholder has additional policies. The agent may have an original
application on file with other information that could be helpful. It is
important to note that in these cases, the agent may request a copy of the
death certificate as well as proof that someone is authorized to find this
information (e.g., copy of will, appointment of executor etc.).
Contact place of employment
One of the many overlooked insurance
policies are those that are purchased through payroll deductions. Calling the
last place of employment of the deceased may result in the discovery of an
active insurance policy that may otherwise go unclaimed. Typically, the Human
Resources department of a company will be able to advise someone of there was a
life insurance policy in place. They can also provide information on how to
claim the benefits.
Safe deposit boxes
Some people have safe deposit boxes that
are used specifically for holding important documents. Heirs should carefully
review all of the documents that are contained in safe deposit boxes to
determine if there are any life insurance policies. When (if) they are found,
contact the company directly for information on how to redeem the benefits from
the policy.
While there are limited resources for
tracking life insurance policies, even if no evidence is found that shows that
a policy exists, there still may be unclaimed insurance policies. It is
important for heirs to realize that there is no time limit on collecting life
insurance benefits that may be due to them. For heirs who believe there may be
unclaimed policies, it is often beneficial to try to locate these policies
through asset searches.
Each state has laws called “escheatment”
laws (e.g., unclaimed property
laws) that require all financial institutions to turn over assets to the
state after specific periods of time. The time period is between three and five
years depending on the state. If policies are turned over to the state, they
can be located free of charge from the states Unclaimed Assets Division or by
using the free services offered by the National Association of Unclaimed
Property Administrators.
