When a loved one dies and you know you are the beneficiary of their life insurance policy, getting the payout is usually pretty easy. You submit an application using a sample and a copy of the death certificate. The insurer then usually pays the claim within a few weeks.
But what if you don’t know if your family member had life insurance? Or what if you can’t find the policy documents? If no one notifies the company about the death of the insured person, it is possible that the money will remain unclaimed. Even if your loved one died years ago, you may have unclaimed life insurance money because there is no deadline for collecting benefits.
Wondering if you might have lost money on life insurance there? Keep reading to learn how to begin your search.
How do life insurance companies find beneficiaries?
Life insurance companies are not automatically notified when someone dies. They establish that the insured has died only when the beneficiary files a claim. If no one notifies the insurer of the person’s death, they will continue to charge premiums. Sometimes, when premiums remain unpaid, the company can deduct that money from the policy benefits.
However, it is becoming increasingly rare for death benefits to go unclaimed. That’s because under the Unclaimed Life Insurance Benefits Act, most insurers check the Social Security Administration’s master death file every six months to look for policyholders. If their search identifies someone who has died, they must try to locate the beneficiary within 90 days.
Not all states have adopted the Unclaimed Life Insurance Benefit Act, but most major insurers follow its recommendations.
Pro tip: Any death benefit you receive is tax-free and does not need to be reported to the IRS. However, any interest you receive from the policy is taxable income.
6 Ways to Find Lost Life Insurance Money
Whether your loved one passed away recently or many years ago, there are several ways to find their life insurance policy. Remember: There is no deadline for claiming this money. But it’s much easier to get your benefit if you file your claim on time. If you’re not sure if your family member or friend had life insurance, here are six steps you can take.
Search their mail and records
If a loved one has recently died, monitor their mail for correspondence from a life insurance company. You can also look for policy documents anywhere they have stored other financial documents, such as tax returns. If you have access to their bank accounts, you can search their transactions to see if they have paid life insurance premiums.
Contact previous employers
Group term life insurance is a common employee benefit, so when a loved one dies, you can contact their previous employers to find out if they were covered by a policy. Also check with any unions or professional associations the person has belonged to.
Use the NAIC Life Insurance Policy Locator
If you’re not sure if your relative or friend had life insurance, you can use the National Association of Insurance Commissioners (NAIC) Life Insurance Policy Finder service to search for a policy. After you make your request, the NAIC will ask participating insurers to search their policy records in the deceased’s name.
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You will need the person’s legal name, social security number, date of birth and date of death. If an insurer discovers a policy, they will contact you if you are the beneficiary or if you are authorized to receive information about the policy.
Search your state’s website for unclaimed properties
If a life insurance company knows that an insured has died but cannot locate the beneficiary, it is required to transfer the death benefit to the state where the policy was purchased as unclaimed property. You can search by state using the National Association of Unclaimed Property Administrators website, unclaimed.org. You can also use the tool to find other unclaimed money, such as forgotten wages and old security deposits.
Use search tools provided by the insurer
Many major life insurance carriers, including MetLife, New York Life and John Hancock, have created their own search tools. By providing a few pieces of personal information about your loved one, you can find out if they were covered by a policy issued by any of the companies listed above.
Pay a company to search for you
In most cases, you will not need to pay a third party company to search for unclaimed life insurance money. But if you think a policy existed and you haven’t been able to find it, it may be worth paying a fee to a search service.
Typically, these companies offer one of two services: they will send emails, letters, and faxes to life insurance companies on your behalf. Or they’ll do an investigation and charge you a percentage of the money they recover.
What to do if you have Life Insurance
The purpose of buying life insurance is to provide financial protection for the people you love, so the idea of your policy getting lost somehow sounds like a nightmare. The good news is that it’s easily avoidable.
The most obvious thing to do is to tell the person you named as the beneficiary about the policy. Tell them the name of the company and where you keep the policy documents. That way, they can file a claim immediately if you die during the covered period.
It is also important to name a contingent beneficiary who will receive the death benefit if the primary beneficiary dies before you. If the primary beneficiary is deceased and there is no contingent beneficiary, the death benefit will become part of your estate and pass through probate, which is often lengthy. Finally, make sure you review beneficiary designations at least once a year and after each major life event, ie. birth of a child, marriage, divorce or death of a loved one.
Fortunately, regulations and advanced technology have made it more difficult to lose life insurance benefits. But you can do your part to make sure your death benefit is paid out as quickly as possible by simply telling your beneficiary about your policy and where they can find it.
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This story originally appeared on Penny’s Treasurer.