By Insure.com
A relative has just died. He had a life insurance policy with you listed as the beneficiary. There's just one problem: You can't find it. You have no idea which insurance company wrote it.
If you find it in the future, are you still eligible to receive the death benefit?
If you're a beneficiary and you find a life insurance policy shortly after the insured dies (within six months to a year, for example), claiming the death benefit should be trouble-free.
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If a few years have passed by, you may have to look to the state — not the insurance company — for help. |
First, determine if the insured had term or permanent life insurance. If the insured held a term policy, you'll receive the death benefit if he died before the end of the policy term. If he died after the policy expiration date, you would get nothing.
If the insured had a permanent life policy, you'll receive the money if the death occurred while the policy was "in force," meaning all premium payments were made up until the time of death. If the death was a while ago, you'll receive the benefit with interest from the date of death.
If the policy lapsed — meaning the insured stopped making premium payments before he died — there's a chance you might get nothing. When a permanent life insurance policy lapses, most insurance companies switch its status from permanent insurance to one of two options:
Gerry Brogla, an actuary for State Farm, says in the majority of the cases at his company, the permanent policy continues as extended term if it lapses. At State Farm, extended term is the default option for most permanent policies.
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Tips for making sure
your beneficiaries get your death benefit ·
Give your beneficiaries your policy information. It can be a
difficult and awkward conversation, but an important one. ·
Keep all your financial records (especially your life insurance
policies) in one place. Don't force your beneficiaries to search your
house from top to bottom after you die. |
If the policy lapses, and the extended-term period expires before the insured dies, the policy is worthless and the beneficiary will get nothing. If the insured dies before the extended-term period is up, the beneficiary will receive the death benefit. If the policy lapsed because the insured died (thus ending premium payments and causing the insurance to be placed in extended-term status), the beneficiary will still collect the full death benefit, regardless of when the extended term was up. The beneficiary always needs to supply the insurance company with a death certificate to verify the date of death.
There is no time limit during which a beneficiary must step forward to collect the money, according to Jack Dolan, spokesman for the American Council of Life Insurers. "If a person shows up 30 years after [the insured's] death, the company still makes good on it," Dolan assures.
If the insured dies and the insurance company does not learn of the death, the policy lapses. Insurance companies will take steps, to find out why a policyholder stopped making payments.
When an insurance company stops getting payments, it sends letters to the insured informing him the policy may lapse as a result of unpaid premiums. If the letters go unanswered, the company might initiate a search to find the insured. If that comes up empty, the company will then lapse the policy.
If a beneficiary to a policy never steps forward, it unfortunately means the insured paid money to a policy throughout his life and his beneficiaries never see a penny. This is why it’s a good idea to make sure beneficiaries are aware of any life insurance policies you have.
In some cases when a beneficiary fails to claim a death benefit for several years, the money is transferred to the state where the insurance policy was purchased under the escheat laws.
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Tips for looking for lost life
insurance policies · Go through canceled checks
or contact your relative's bank for copies of old checks. Look for checks
made out to insurance companies. · Ask those who may have
known about your relative's finances. Speak with the relative's lawyer,
banker or accountant. Also contact the relative’s insurance agent. · Contact your relative's
past employers. They might know of possible group insurance. The insured
might have also purchased supplemental insurance through work. · Contact the Medical
Information Bureau. If your relative bought life insurance fairly
recently, there might be a trail of the companies to which he applied. The
Medical Information Bureau maintains a database that might show if insurers
requested your relative's medical information within the past seven years.
Record searches can be requested through the Disclosure Office of the MIB and cost $9. |
If a company knows an insured died and it cannot find the beneficiary, it must turn the full death benefit over to the state comptroller's department within three to five years of the insured's death. The money is transferred to the state where the insured bought the policy. The money is considered "unclaimed property" and gets lumped in with dormant bank accounts and uncollected rent deposits. The comptroller's department maintains a database that lists the names and addresses of lost beneficiaries.
Many states will try to contact beneficiaries in an effort to pay the death benefits. In Texas, for example, the names and addresses of the beneficiaries are published annually in each county in the state. The New York State Comptroller's office has a web site where you can find any unclaimed death benefits owed to you. You can find out the procedures in your state, by contacting the office of your state comptroller or treasurer.
Keep in mind your chances of finding the policy with the state are slim. The insurance company has no obligation to hand the money over to the state if it’s unaware the insured died. In most cases, it's the beneficiary who contacts the insurance company.
Also, the insurer only transfers the money to the state three to five years after it cannot find the beneficiary but knows the insured died. If the state doesn't have the death benefit, it’s likely the insurer is still looking for the beneficiary or doesn't know the policyholder has died.
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Many states |
Death benefits are rarely transferred to the state. Dave Potter, a spokesman for Hartford Life, says less than 1 percent of his company’s death benefits go unclaimed.
Del Chance, a life insurance claims manager at State Farm, says "Turning over life policy benefits to an individual state after the death of an insured is extremely rare… State Farm utilizes their own search techniques as well as outside vendors to locate lost beneficiaries in the event of the death of one of our insureds. By and large these procedures have always located the beneficiary."