Editor’s note: We met Surefiy, a life insurance education startup at Finovate 2014 who told us that there is over $1 billion dollars of unclaimed life insurance money from lost or forgotten policies. Given life insurance is an important part of estate planning, we thought it would be nice to host a guest post from their CEO.
It can be easy to underestimate the amount of important paperwork and documentation that accumulates over a person’s lifetime. But when you lose someone close to you, such as a spouse or parent, and you face the legal, emotional, and financial aftermath of that person’s final affairs, this reality becomes clear.
Important documentation that can often be lost or overlooked is life insurance. People often use life insurance to leave an inheritance for their loved ones, but it is not uncommon for an older person to forget about life insurance policies that they acquired throughout their life.
Life insurance companies are very unlikely to dispense a death benefit unless the beneficiary makes a claim. The occurrence of bereaved people forgetting about their status as beneficiaries to their dearly departed is more common than you might think. Likewise, policyholders often fail to properly communicate to their loved ones the facts of their policy or the steps necessary to claim a death benefit.
Arkansas and Florida are two states that have dealt with substantial unclaimed life insurance issues. In early March, a family from Little Rock was pleasantly surprised to find their names in a local newspaper ad run by an insurance company searching for long-lost beneficiaries. A similar situation has taken place in Florida. However, it is not the norm for insurance companies to seek out beneficiaries. The insurance companies’ actions in Florida and Arkansas were more the result of legal mandates from the state than a sudden desire to part ways with death benefits they were lawfully bound to relinquish. It just goes to show that if you seriously think there’s a policy floating around that you might benefit from, you should take it upon yourself to search for it.
If you have lost a loved one – perhaps a spouse, parent or other close family member – you may be entitled to unclaimed benefits from life insurance you were unaware the deceased had. You could be the beneficiary of a policy right now without realizing it.
However, you’ll need to know where to start looking since life insurance carriers typically do not automatically dispense benefits upon the death of a policyholder. They must be notified and given a copy of the death certificate before the claims process can begin.
How to Find Out if You Have Unclaimed Life Insurance Money
If you think a deceased loved one or parent had some life insurance unbeknownst to you, here are 5 ways to find out:
1) Your File Cabinet – Your first clue will probably be found deep in old paperwork. If you come across any correspondences or old premium notices from Life Insurance Company X, you’re onto something. Call the insurance company. They’ll have to verify your identity and get a copy of the policyholder’s death certificate, but the claims process shouldn’t be much more difficult than that.
2) Online Search Service – There are some web services that specialize in unclaimed money. The National Association of Unclaimed Property Adminstrators (NAUPA) is one such service and NAUPA-endorsed missingmoney.com is another search database resource worth checking out.
3) State Insurance Department – There’s also the option of contacting your state insurance department (insurance is regulated at the state level). They may have some helpful information but don’t be too hopeful. They don’t devote a lot of resources to sorting out unclaimed money issues.
4) Bank Statements – Maybe the file cabinet was a dead end. The bank might have some good information. Do a search for canceled checks to locate past premium payments. Find out which insurance company they were sent to and give them a call.
5) Medical Information Bureau – A final resort for locating a lost life insurance policy is to contact the Medical Information Bureau, Inc. MIB is a consumer reporting agency and storehouse of consumer information collected from health and life insurance entities. For a fee they will conduct a search for a policy that you are looking for.
Keep Communication Lines Open
If you are a policyholder, make sure your beneficiaries know about the benefits to which they are entitled. They need to know what benefits they stand to gain and how they can acquire them through a claims process. If you have lost a loved one, regardless of how long ago, it may be worth your while to investigate the possibility of a death benefit waiting in limbo for you to make a claim; you might be pleasantly surprised.
Were you an oblivious beneficiary? Share with us in the comments if you found any unclaimed life insurance policies or know someone who has.
Author: Dustin Yoder is the CEO of Sureify, the unbiased, third-party source for life insurance education online. Sureify is a life insurance education platform where life insurance shoppers can learn about their life insurance options, estimate their coverage needs, compare policy types and walk away with a free, personalized life insurance plan so that they’re equipped to buy with confidence.
Photo: Creative Commons