InsuranceThought — Blogs About Insurance

If a relative, who has named you as the beneficiary of his or her life insurance policy, has died, are you still eligible to receive the death benefit if you are unable to find the policy and have no idea which company it is with?

Let’s take a look:

If you are able to find the lost life insurance policy within six months to a year of the person who has named you as their beneficiary has died, claiming the death benefit should be relatively trouble free.

Permanent or Term Life Insurance Policy:

You’ll want to first determine if the insured had permanent or term life insurance.

If he or she had a permanent life policy, you will receive the benefit if the death occurred during the period that the policy was “in force.” This means all premium payments were made up to the time of death. You may be eligible to receive interest from the time of death if it has taken some time for you to claim the benefits.

If the insured held a term policy, you will receive the benefit if he or she died before the end of the policy term. If the death occurs after the expiration date of the policy, you would not receive anything.

There’s also a chance that you may not receive any benefits if the insured stopped making the premium payments before the time of death.

If a policy holder stops making payments on permanent life insurance, causing his or her policy to lapse, most companies will switch the status of the policy to one of the following two options:

Extended Term: The insurance company uses the cash value of the permanent life policy to buy a term policy for the same death benefit. This benefit will continue until the cash value has been depleted.

Reduced Paid Up: The insurance company keeps the policy in force as permanent life, but reduces the death benefit.

Check with Your State Comptroller Department

There are cases in which – under the escheat laws – a beneficiary has failed to claim a death benefit for several years, so the money is transferred to the state where the policy was purchased.

If an insurance company has knowledge of an insured’s death but cannot find the policy’s beneficiary, it must turn the full benefit over to the state comptroller’s office within three to five years of the death. This money is considered “unclaimed property” and is lumped in with dormant bank accounts. A database is maintained by the comptroller department that has lost life insurance beneficiary names and addresses.

Tips for looking for lost life insurance policies:

1. Go through canceled checks or contact the deceased’s bank for copies of old checks to find any that are made out to insurance companies.

2. Ask those who may have known about the deceased’s finances. Speak with the his or her insurance agent, lawyer, accountant, or banker.

3. Contact the deceased’s past employers. They may know of group life insurance. It’s possible that he or she purchased supplemental life insurance through work.

4. Check the deceased’s mail for a year. Premium bills and policy-status notices are usually sent annually.

5. Look at the deceased’s income tax returns for the past two years. Check for interest income from policies or expenses paid to life insurance companies.

6. Contact the Medical Information Bureau. If the deceased bought life insurance fairly recently, there might be a trail of the companies to which he or she applied. The Medical Information Bureau (MIB) maintains a database that might show if insurers requested his or her medical information within the past seven years. The MIB claims that approximately 30% of searches turn up leads.