How to Find Life Insurance Proceeds When a Policyholder Passes Away
When an insurance company learns that one of its policyholders dies, the law requires the company to find the deceased's beneficiaries. This means that insurers must make all possible efforts to locate any survivors, which can be a difficult task in a modern and very mobile society. However, with the use of modern technology and resources, insurers are often able to track down even hard-to-find beneficiaries.
What Is Done With Unclaimed Insurance Money?
To keep track of all deaths of insured individuals, the Social Security Administration requires insurance companies to use their Death Master File. This is a list of all deaths in the United States. The list must be updated on a weekly basis, and its purpose is to create alerts about when companies are obligated to pay death benefits to beneficiaries. If insurers exhaust all available resources and have made as many attempts as possible to locate beneficiaries without success, they must turn over any unclaimed money to the state. The average time period for trying to find beneficiaries is usually a few years. When the money is turned over to the state after that time period ends, it sits in a coffer. If a beneficiary surfaces and inquires about the money, he or she will be able to access it. It may take some time to recover money from the state, so it is important to know how to locate a policy.
Finding A Policy
Most people are not sure where to begin looking for paper copies of a deceased loved one's life insurance policy. However, the following tips can make the process easier in some cases:
- Look at old tax returns. If a life insurance policy paid interest, the documentation may be in the tax records.
- Check the individuals files. If a person kept a file system, look for insurance folders or even correspondence documents. Some people have located policies by tracking down information and contact data on verification letters.
- Call a suspected insurance company. Some people may remember a loved one referring to a specific company. In such cases, making a call to the company may help. This is also a good way to find out if a company has merged with another over the years.
- Check the deceased's mail. Payment schedules for policies vary from one company to another, but insurers send out statements or invoices when it is time for policyholders to make payments. Some also send out frequent statements for policies that are no longer receiving payments.
- Ask the deceased's employer for documents. When a person is employed at the time of his or her death, a good place to start looking for life insurance documentation is at that person's workplace. Any union policies or employer-provided life insurance information will be found there.
- Contact the deceased's state of residence. If more than two years has passed since the insured individual died and no documents surface, it is important to call the state agency handling unclaimed property. Another option is to visit the National Association of Unclaimed Property Administrators to learn how to start looking.
Ensuring Money Goes To Family Members
People who have one or more life insurance policies are able to keep their families from losing out on benefits. The first step in ensuring they receive their money is to tell the beneficiaries about the policy. If possible, give each person a copy of the policy or a statement from the insurer. When the beneficiaries are children, it is better to relay the document copies to whoever will be the executor of the will. Make sure all estate planning information is updated to reflect any changes to life insurance policies as soon as changes are made. Overall, the key idea is to make sure beneficiaries or executors know where to look. For more information or for answers to any questions, discuss concerns with an agent.