Published: June 2015
Life insurance is meant to help out your loved ones after you die. But what happens if a relative passes on, and you don't even know that a policy exists - or how to track one down?
Unclaimed life insurance policies are more common than you might think. Hundreds of millions of dollars in life insurance benefits are unclaimed each year, according to the New York Times. And while that may surprise you, the Insurance Information Institute (III) says there are a number of reasons why it happens.
An unclaimed life insurance policy may be the result of incomplete or outdated beneficiary information, which can make it difficult for the insurance company to track you down. A policy can also go unclaimed because the insurance company simply doesn't know that your loved one has died. There's no "master database" of such events, the III says; most companies are only informed of a death when a beneficiary calls in to inquire about a claim.
If a relative of yours has died, there are ways to find out whether they have an unclaimed life insurance policy. Try a few of the III's suggestions for unearthing the information:
Check with state officials. If you know a policy exists, but can't find the documents, try the National Association of Insurance Commissioners' location system. It can connect you with your state's insurance department, which can help you track down a company that may have sold your loved one a policy (companies frequently change names due to mergers or acquisitions). You can also search the state's unclaimed property department to see if you are due any funds.
Find evidence of a past payment. If you're uncertain whether your loved one had a life insurance policy, check through file cabinets and safety deposit boxes to uncover old billing notices or receipts for paid premiums (most life insurance companies still use snail 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 advisers and employers. Look through address books to find contact information for your loved one's financial adviser, who may have sold a policy. You might also reach out to your loved one's workplace (or a 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.
Of course, the best way to prevent having to search for an unclaimed life insurance policy is to talk with your relatives and encourage them to tell beneficiaries that they've been named on a policy. 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 investment in life insurance gets passed on just as everyone intended.