How to find a lost life insurance policy.
As we mourn the highprofile deaths of soul icon Aretha Franklin and Arizona Sen. John McCain this past week, it’s not a bad time to put a spotlight on dreaded topics, such as end-oflife paperwork.
You might think no one could lose track of a life insurance policy. Think again. At one point, it was estimated that at least $10 billion in life insurance policies nationwide had gone unclaimed or unpaid.
One might think, wrongly, that if someone dies with an insurance policy that somehow the beneficiary will find out about it and be able to claim the money. But that’s not always true.
Several years ago, life insurers faced tough scrutiny from state regulators in California, Florida and elsewhere for the failure to pay death benefits because it is up to the beneficiaries to file a claim following a death.
But how do you file a claim if you don’t know if there’s a policy?
Florida regulators maintained that life insurance companies were not taking adequate steps to try to pay up when some information was available but no life insurance claim had been filed. Insurers would use information from the Social Security Administration’s Death Master File to stop paying a deceased person’s annuity but not use similar information to search for beneficiaries of a life insurance policy.
A multistate effort by regulators led to settlements in which more than $8.7 billion in life insurance proceeds was returned to U.S. consumers. And more than $3.25 billion was returned to individual states, where unclaimed-property programs continue efforts to locate and pay beneficiaries.
Since then, more programs exist to help consumers search for lost life insurance policies.
How do you start looking for a lost life insurance policy?
NO. 1: DIG FOR CLUES IN THE PAPERWORK
What you want to find is any kind of paper trail that might uncover a lost or little-known insurance policy for a deceased loved one.
About 59 percent, or 192 million, of Americans have some type of life insurance, either covered in individual or group policies, according to LIMRA, which focuses on life insurance and retirement research.
Where to look: Bank statements or old canceled checks could show payments that were made to life insurance companies over the years.
Look for paperwork in lock boxes or safety deposit boxes. Ask family members, financial advisers and insurance agents about life insurance policies.
Are there any copies of applications for life insurance policies in files or drawers? An application for a life insurance policy would list other life insurance policies owned at the time of the application.
Review copies of the deceased’s tax returns for the past two years to spot any interest income or expense reported that relates to a life insurance policy.
Do something as basic as keeping an eye on the mail, according to a tips list from the Insurance Information Institute. Look for premium notices or dividend notices in the mail for the year following the death of a policyholder.
Check with any former employers of the deceased, as they may have information on group life coverage.
NO. 2: DO A FREE SEARCH OF DATABASES
Often, life insurance companies will respond directly to someone only if the insurers have reason to believe that they have a policy or annuity contract in the name of the deceased. And you’d need to be the designated beneficiary or someone who is authorized to receive such information.
Consumers can do free searches via 29 state insurance departments. State insurance departments do not have records of specific insurance policies. But the departments can assist consumers in finding lost policies for the deceased.
The National Association of Insurance Commissioners, a group of state regulators, helps locate lost policies for those who believe they are beneficiaries, as well as executors, through its “Life Insurance Policy Locator.” See www.naic.org and click on “Consumers.”
Remember, the searches are free. The answers aren’t immediate and could take a few months before you’re notified.
Even if you think you’ve found one policy, it could be worth doing a search in case others exist.
When my dad died, my mother filed a claim on his life insurance policy in 2001. But somehow another policy fell through the cracks with the same insurer. And we didn’t even discover that policy that my father held until after my mother died 10 years later. It was one incredible, ridiculous effort and it felt like an amazing victory to finally receive that very modest check.
Searching should be far easier now.
NO. 3: CHECK WITH THE STATE’S UNCLAIMED PROPERTY OFFICE
If a life insurance company knows that an insured client has died but can’t find the beneficiary, the insurer must turn the death benefit over to the state where the policy was purchased.
See the National Association of Unclaimed Property Administrators or www.unclaimed.org to do a search. You’re able to find the state via the site. If you can guess where the policy was bought, you can contact the state to see if it has any unclaimed money from life insurance policies belonging to the deceased.
Again, it’s worth it to take the time reviewing unclaimed property databases even when someone hasn’t died. Over the years when I’ve looked, I found an uncashed paycheck for my brother-in-law, as well as more unclaimed cash for co-workers.