| A relative has just died. He had a life insurance policy | | | | transferred to the state where the insurance policy |
| with you listed as the beneficiary. There's just one | | | | was purchased under the escheat laws. |
| problem: the life insurance policy is missing. You have | | | | If a company knows an insured died and it cannot |
| no idea which insurance company wrote it. | | | | find the beneficiary, it must turn the full death benefit |
| If you find the missing life insurance policy in the | | | | over to the state comptroller's department within |
| future, are you still eligible to receive the death | | | | three to five years of the insured's death. The |
| benefit? | | | | money is transferred to the state where the insured |
| Hope they paid their insurance bills | | | | bought the policy. The money is considered |
| If you're a beneficiary and you find the lost life | | | | "unclaimed property" and gets lumped in with |
| insurance policy shortly after the insured dies (within | | | | dormant bank accounts and uncollected rent deposits. |
| six months to a year, for example), claiming the | | | | The comptroller's department maintains a database |
| death benefit should be trouble-free. | | | | that lists the names and addresses of lost life |
| First, determine if the insured had term or permanent | | | | insurance beneficiaries. |
| life insurance. If the insured held a term policy, you'll | | | | Many states will try to contact life insurance |
| receive the death benefit if he died before the end | | | | beneficiaries in an effort to pay the death benefits. |
| of the policy term. If he died after the policy | | | | In Texas, for example, the names and addresses of |
| expiration date, you would get nothing. | | | | the beneficiaries are published annually in each county |
| If the insured had a permanent life policy, you'll | | | | in the state. In New York, the Web site of the New |
| receive the money if the death occurred while the | | | | York State Comptroller's Office of Unclaimed Funds |
| policy was "in force," meaning all premium payments | | | | has an online search to find any unclaimed death |
| were made up until the time of death. If the death | | | | benefits owed to you. You can find out the |
| was a while ago, you'll receive the benefit with | | | | procedures in your state by contacting the office of |
| interest from the date of death. | | | | your state comptroller or treasurer. |
| If the life insurance policy lapsed — meaning the | | | | Keep in mind your chances of finding the policy with |
| insured stopped making premium payments before | | | | the state are slim. The insurance company has no |
| he died — there's a chance you might get nothing. | | | | obligation to hand the money over to the state if it's |
| When a permanent life insurance policy lapses, most | | | | unaware the insured died. In most cases, it's the |
| insurance companies switch its status from | | | | beneficiary who contacts the insurance company. |
| permanent insurance to one of two options: | | | | Also, the insurer only transfers the money to the |
| "Extended term" — The insurance company uses | | | | state three to five years after it cannot find the |
| the cash value of the policy to buy a term life | | | | beneficiary but knows the insured died. If the state |
| insurance policy for the same death benefit using the | | | | doesn't have the death benefit, it's likely the insurer is |
| cash value of the policy. The death benefit will | | | | still looking for the beneficiary or doesn't know the |
| continue for the longest period the cash value will | | | | policyholder has died. |
| purchase. | | | | Unclaimed death benefits are rarely transferred to |
| "Reduced paid up" — The insurance company will | | | | the state. Dave Potter, a spokesman for Hartford |
| keep the policy in force permanently, but will reduce | | | | Life, says less than 1 percent of his company's death |
| the death benefit. | | | | benefits go unclaimed. |
| Gerry Brogla, an actuary for State Farm, says in the | | | | Del Chance, a life insurance claims manager at State |
| majority of the cases at his company, the permanent | | | | Farm, says, "Turning over life policy benefits to an |
| policy continues as extended term if it lapses. At | | | | individual state after the death of an insured is |
| State Farm, extended term is the default option for | | | | extremely rare. State Farm utilizes their own search |
| most permanent policies. | | | | techniques as well as outside vendors to locate lost |
| If the policy lapses, and the extended-term period | | | | beneficiaries in the event of the death of one of our |
| expires before the insured dies, the policy is | | | | insureds. By and large these procedures have always |
| worthless and the life insurance beneficiary will get | | | | located the beneficiary. |
| nothing. If the insured dies before the extended-term | | | | Tips for making sure your life insurance beneficiaries |
| period is up, the beneficiary will receive the death | | | | get your death benefit: |
| benefit. If the policy lapsed because the insured died | | | | 1. Give your beneficiaries your policy information. It |
| (thus ending premium payments and causing the | | | | can be a difficult and awkward conversation, but an |
| insurance to be placed in extended-term status), the | | | | important one. |
| beneficiary will still collect the full death benefit, | | | | 2. Keep all your financial records (especially your life |
| regardless of when the extended term was up. The | | | | insurance policies) in one place. Don't force your |
| beneficiary always needs to supply the insurance | | | | beneficiaries to search your house from top to |
| company with a death certificate to verify the date | | | | bottom after you die. |
| of death. | | | | Tips for looking for lost life insurance policies: |
| There is no time limit during which a life insurance | | | | 1. Go through canceled checks or contact your |
| beneficiary must step forward to collect the money, | | | | relative's bank for copies of old checks. Look for |
| according to Jack Dolan, spokesman for the | | | | checks made out to insurance companies. |
| American Council of Life Insurers. "If a person shows | | | | 2. Ask those who may have known about your |
| up 30 years after [the insured's] death, the company | | | | relative's finances. Speak with the relative's lawyer, |
| still makes good on it," Dolan assures. | | | | banker or accountant. Also contact the relative's |
| What happens if no one ever reports the death? | | | | insurance agent. |
| If the insured dies and the insurance company does | | | | 3. Contact your relative's past employers. They might |
| not learn of the death, the policy lapses. Insurance | | | | know of possible group life insurance. The insured |
| companies will take steps to find out why a | | | | might have also purchased supplemental life insurance |
| policyholder stopped making payments. | | | | through work. |
| When an insurance company stops getting payments, | | | | 4. Check the mail for a year. Premium bills and |
| it sends letters to the insured informing him the policy | | | | policy-status notices are usually sent annually. |
| may lapse as a result of unpaid premiums. If the | | | | 5. Look at income tax returns for the past two |
| letters go unanswered, the company might initiate a | | | | years. Check for interest income from policies or |
| search to find the insured. If that comes up empty, | | | | expenses paid to life insurance companies. |
| the company will then lapse the policy. | | | | 6. Contact the Medical Information Bureau. If your |
| If a beneficiary to a policy never steps forward, it | | | | relative bought life insurance fairly recently, there |
| unfortunately means the insured paid money to a | | | | might be a trail of the companies to which he applied. |
| policy throughout his life and his beneficiaries never | | | | The Medical Information Bureau (MIB) maintains a |
| see a penny. This is why its a good idea to make | | | | database that might show if insurers requested your |
| sure beneficiaries are aware of any life insurance | | | | relative's medical information within the past seven |
| policies you have. | | | | years. Record searches can be requested through |
| If you're lucky, the state may have your money | | | | the MIB's Policy Locator Service and cost $75. The |
| In some cases when a beneficiary fails to claim a | | | | MIB says that nearly 30 percent of searches turn up |
| death benefit for several years, the money is | | | | leads. |