When your loved one dies and you know you’re the beneficiary of their life insurance policy, it’s usually fairly straightforward to get paid. You submit a claim form and a copy of the death certificate. Then the insurer usually pays the claim within a few weeks.
But what if you don’t know if a family member has a life insurance policy? Or what if you can’t find the policy documents? If no one notifies the company of the death of the insured person, the money may not be claimed. Even if your loved one died years ago, you could have unclaimed life insurance funds because there is no deadline for collecting benefits.
Wondering if you could have lost your life insurance money there? Keep reading to find out how to start your search.
How do life insurance companies locate beneficiaries?
Life insurance companies are not automatically notified of a person’s death. They only find out that the insured person is dead when the beneficiary files a claim. If no one notifies the insurer of the person’s death, it will continue to charge premiums. Sometimes, when premiums are not paid, the company may deduct this money from the policy benefits.
However, it is becoming increasingly rare that death benefits go unclaimed. This is because, under the Unclaimed Life Insurance Benefits Act, most insurers check the Social Security Administration’s Death Master File twice a year to find insureds. If their search identifies a deceased person, they must attempt to locate the beneficiary within 90 days.
Not all states have passed the Unclaimed Life Insurance Benefits Act, but most major insurers follow its recommendations.
Pro Tip: Any death benefit you receive is not taxable and does not need to be reported to the IRS. However, any interest you receive from the policy is taxable income.
6 ways to find lost life insurance money
Whether your loved one died recently or several years ago, there are several ways to locate their life insurance policy. Remember: there is no deadline to claim this money. But it’s much easier to get your benefit if you file a claim in a timely manner. If you’re not sure if a family member or friend had life insurance, here are six steps you can take.
Search their mail and folders
If a loved one has recently died, keep an eye on their mail for correspondence from a life insurance company. You can also search for policy documents where they have kept other financial documents, like tax returns. If you have access to their bank accounts, you can search their transactions to see if they were paying life insurance premiums.
Contact former employers
Band term life insurance is a common benefit for employees. So when your loved one dies, you can contact their former employer to find out if they were covered by a policy. Also check with any union or professional association to which the person belonged.
Use the NAIC’s Life Insurance Policy Locator
If you are unsure if your relative or friend had life insurance, you can use the National Association of Insurance Commissioners (NAIC) Life Insurance Policy Locator Service to search for a policy. After you apply, the NAIC will ask its participating insurers to search their records for a policy in the name of the deceased.
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You will need the person’s legal name, social security number, date of birth, and date of death. If an insurer locates a policy, they will contact you if you are the beneficiary or if you are authorized to receive policy information.
Search your state’s unclaimed property website
If a life insurance company knows that an insured person has died but cannot locate the beneficiary, it is required to remit the death benefit to the state where the policy was purchased as unclaimed property. You can search by state using the National Association of Unclaimed Property Administrators website, unclaimed.org. You can also use the tool to find other unclaimed moneylike forgotten paychecks and old security deposits.
Use the research tools provided by the insurer
Many large life insurance companies, including MetLife, New York life and John Hancock, have created their own research tools. By providing some personal information about your loved one, you can find out if they were covered by a policy issued by one of the companies listed above.
Pay a company to search for you
In most cases, it will not be necessary to pay a third-party company to search for the unclaimed life insurance funds. But if you think a policy existed and you weren’t able to locate it, it may be worth paying a search service a fee.
Generally, these companies offer one of two services: they will send emails, letters and faxes to life insurance companies on your behalf. Or they will conduct an investigative search and charge you a percentage of the money they recover.
What to do if you have life insurance
The whole point of buying life insurance is to provide financial protection to the people you love, so the thought of your policy somehow getting lost sounds like a nightmare. The good news is that it’s easily preventable.
The most obvious thing you can do is tell the person you named as the beneficiary of the policy. Let them know the name of the company and where you keep policy documents. This way they can submit a claim immediately if you die during the covered period.
It is also essential to name a contingent beneficiary who will receive the death benefit if the primary beneficiary predeceases you. If the primary beneficiary is deceased and there is no contingent beneficiary, the death benefit will become part of your estate and go through probate, which is often time-consuming. Finally, be sure to review beneficiary designations at least once a year and after any major life event, such as the birth of a child, marriage, divorce or the death of a loved one.
Fortunately, regulation and modern technology have made it harder to lose life insurance benefits. But you can do your part to make sure your death benefit is paid out as quickly as possible by simply telling your beneficiary what your policy is and where they can find it.
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This story originally appeared in The Penny Hoarder.