Every year, millions of dollars of life insurance proceeds go unclaimed because beneficiaries do not realize that a policy exists, or if they do, do not know how to find it. Lost policies are more common than you might think. Sometimes the beneficiary was never informed about its existence by the policyholder, or the beneficiary has just forgotten about it. Sometimes policy documents are lost or misplaced because of sloppy record-keeping, or because the policyholder failed to inform the insurer of a change of address, an especially common occurrence if the policy was paid in full. Whatever the reason, there is some good news: there are steps you can take to hunt down a lost policy.
Start With The Decedent’s Belongings
The trustee or personal representative of the decedent’s estate will have access to the decedent’s paperwork and digital files. That is the first place to go looking for the document. Other sources of information include cancelled checks, and former employers that may have covered the decedent with a group life insurance policy.
Do Not Count On The Insurance Company Contacting You
Under the Unclaimed Life Insurance Benefits Act, life insurance companies are required to periodically check the Social Security master death index against their list of policyholders. If they find a policyholder has passed away, they must contact the beneficiaries and distribute the proceeds. However, you cannot rely on the insurance company finding you if you are a beneficiary. The master death index reflects only those with Social Security numbers whose deaths have been reported to the agency. In addition, human error can creep into the records. Therefore, your next step to find a lost policy is to contact the insurance carrier.
Contact The Insurance Carrier
If you think you know the specific company that insured the decedent, contact the company. Some companies, such as MetLife and John Hancock, maintain a web portal with a search function for this purpose.
If you do not know or are uncertain of the company that issued the policy, use the universal search tool provided by The National Association of Insurance Commissioners.
You should be aware that not everyone is entitled to retrieve information about life insurance policies. Companies will release information only to the policy owner, the insured party, a named beneficiary or a fiduciary of the estate.
Search Unclaimed Funds
If an insurance company is unsuccessful at finding the beneficiary of a deceased policyholder, the company is not allowed to just keep the funds. Under the Uniform Disposition of Unclaimed Property Act, the company must release the proceeds to the treasurer of the state in which the decedent last resided. There are two databases for unclaimed funds you can use to hunt down lost insurance proceeds:
- National Association of Unclaimed Property Administrators. Find it here.
- The Florida Division of Unclaimed Property. Click here.
How To Prevent Lost Policies
If you are an owner of a life insurance policy, take these steps to prevent the policy from being lost:
- Keep the policy in a safe place.
- Inform trusted family members that the policy exists.
- Inform the person who will be in charge of administering your estate (trustee, personal representative and their backups), where the policy can be found and how to access it.
- Inform the beneficiaries that the policy exists.
- Review the policy periodically and update beneficiaries as needed.
- Inform the insurance carrier of any change of address.
As with everything in your estate planning, good communication and good organization are key to making sure your assets ultimately end up in the right hands.
