Life Insurance How To Track Unclaimed Life Insurance Money

While some people leave records behind in a superbly organized "in case of my demise" file, it's not unusual for others to pass away without letting relatives know about the existence of a life insurance policy. When someone's life insurance is lost or goes unclaimed, tracking it down can take some detective work. But it may be worth your time to see if a loved one left you something besides memories.

Lots of 'lost' life insurance

According to a recent study by Consumer Reports, 1 out of every 600 people is the beneficiary of an unclaimed life insurance policy, with an average benefit of $2,000. Jeff Blyskal, Consumer Reports senior editor and the author of the study, says at least $1 billion worth of lost or forgotten insurance policies are waiting for someone to claim them.

Life insurers, who paid out $62 billion in benefits in 2011, make efforts to find the rightful owners of unclaimed insurance proceeds, says Whit Cornman, a spokesman for the American Council of Life Insurers in Washington, D.C.

"Insurance companies proactively search for beneficiaries; in fact, some companies have whole offices dedicated to that purpose," he says.

But states want them to try harder. In recent years, several states have put laws on the books requiring insurers to use Social Security data to identify policyholders who have died and then undertake systematic searches for the insurance beneficiaries. States that have adopted these laws in 2013 include Montana and New Mexico.

Be ready for some legwork

So, do you think there might be an insurance windfall out there with your name on it? Be ready for some work. And keep in mind that insurance companies will provide information only to people who can prove they are the beneficiaries, says Steven Weisbart, senior vice president and chief economist at the Insurance Information Institute, a New York-based trade group.

"If an insurance company won't talk to you, that's an indication that you're not entitled to the insurance benefit," he says.

How to conduct your search

If you believe a relative who passed away may indeed have purchased a policy and named you as the beneficiary, try these steps to track down the unclaimed life insurance proceeds. You'll need the full legal name of your relative, plus it helps to have their Social Security number and any former addresses.

Search for policy paperwork. "If the death occurred fairly recently, you should check the mail and bank statements for premium payments or policy-related materials," says Weisbart.

If you're the executor of the deceased's estate, check any safe-deposit box and go through any personal files, Blyskal adds.

Search for the insurance company. If you find evidence of a policy and can identify the insurance company, "Most (insurers) have dynamite resources available to help you manage through a claim and do it in a way that's both fast and yet sensitive," says Joe Monk, senior vice president and chief administrative officer for State Farm's life insurance unit in Bloomington, Ill. Monk told Bankrate in an interview that beneficiaries who can't locate the insurance company listed on a policy should contact their state insurance department.

Make sure you're looking in the correct state. You need to know where the policy was purchased. "Even if your relative died in Ohio, they might have lived in Illinois when they bought life insurance," Blyskal says.

If the insurance company went out of business, the state insurance commissioner should have records on what happened to the policies, Weisbart says.

Check with rating services. An insurance rating agency, such as A.M. Best Co., also should have information to help you track insurers, including those that are defunct, says Weisbart.

Search for a financial connection. "If your relative worked with an insurance agent, accountant or financial planner, that person may know what insurance company a life insurance policy was with, even if (the professional) didn't have anything to do with that particular policy," says Weisbart.

Look for a missing policy locator in your state. Cornman says these services, typically part of the state insurance office, allow consumers who believe they are the beneficiary of a life insurance policy purchased in that state to submit a request to have life insurance companies located there to check their files.

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