How to locate an unclaimed life insurance policy

A life insurance policy is unclaimed when the insured person passes away and the named beneficiary does not claim the death benefit from the policy. The Insurance Information Institute (III) says there are a number of reasons why life insurance benefits are not claimed.

An unclaimed life insurance policy may be the result of incomplete or outdated beneficiary information, which can make it difficult for the insurance company to track a beneficiary down. Unclaimed life insurance policies also exist because the insurance company simply doesn't know that the insured person has died. Most insurers are informed of a death only when a beneficiary initiates a claim.

When a close relative or loved one passes, life insurance benefits can help pay for their final expenses and more. If you're not sure whether your loved one had a life insurance policy in place, you may be able to find out. Try a few of the III's suggestions for looking up the information:

Check with state officials.

If you know a policy exists, but can't find the documents, try the NAIC's Life Insurance Policy Locator System. The organization can check with participating insurers to see whether they have a policy in your deceased loved one's name. You can also search the state's unclaimed property department to see if you are due any funds.

Look in storage areas for evidence of a past payment.

If you're uncertain whether your loved one had a life insurance policy, check through storage areas such as file cabinets and safety deposit boxes to uncover old billing notices or receipts for paid premiums (Some life insurance companies still use mail as a primary means of communication, the III says). Then, look through bank statements, canceled checks or credit card statements to find any record of past premium payments.

Contact financial professionals and employers.

Look through address books to find contact information for your loved one's financial professional, who may have sold them a policy. You can also check with your loved one's insurance agent to see if your relative also had a life insurance policy with the same insurer. You might also reach out to your loved one's workplace (or past employer) to find out if there is a policy in place. Of course, you may have to provide some identification or otherwise show that you're entitled to the records.

Review tax returns and other policies.

Review recent tax returns and look for interest payments from an insurance company. Also, be sure to review the application from any life insurance policies that you do know about (it's usually attached to the policy), because it will often provide evidence of any other life insurance that was in effect at the time, the III says.

Use a third-party company.

According to the III, private companies can help assist you with the search for a lost life insurance policy by contacting the deceased's insurance companies on your behalf. Keep in mind you may have to pay for this type of service.

One way to help prevent life insurance benefits from going unclaimed is to talk with your relatives and encourage them to tell beneficiaries that they've been named on a policy, the III says. Also, make sure to keep everyone's contact information on the policy current.

Then, be sure to follow the III's recommendations on how to organize and store policy information — whether it's your loved one's or your own.

For instance, consider maintaining two copies of each policy: one at home, with your financial records or legal papers; and one offsite in a safety deposit box or with a trusted relative. The III recommends that you record dates that the policy was last updated on each copy, so your relatives will know which copy is the most current.

Maintaining updated beneficiary information and life insurance records may take a little extra effort, but it can help your loved ones track down a policy when the time comes. And, more importantly, it'll help make sure that the life insurance benefit gets passed on as intended.