Guide to Claiming Unclaimed Life Insurance Funds
Life insurance is a fundamental financial instrument that gives policymakers and their beneficiaries security and peace of mind. Yet, millions of dollars worth of life insurance benefits go unclaimed every year for a number of reasons, including unawareness or bad communication. These are life insurance benefits that the insurer has not paid out to the beneficiaries after the death of the policyholder. This article provides a step-by-step guide on how to claim these unclaimed or abandoned funds.
Reasons Behind Unclaimed Life Insurance Funds
There is more than one reason that keeps life insurance benefits unclaimed. Many times, beneficiaries do not even know there is a policy that even exists. This can occur when the policyholder does not notify their family members or when the paperwork is lost. Further, divorce or estrangement from family can also leave people confused about who the rightful heir is. NAIC estimates that billions of dollars of life insurance benefits go unclaimed each year1.
To Claim Unclaimed Life Insurance Funds
If you break due claiming unclaimed life insurance funds in to steps, it can be fairly simple. Here are the essential steps:
Step 1: Get information you need to settle the estate — First, get the information you need about the deceased: Full name, Social Security number, and possibly life insurance policy numbers. This would make it easier to contact insurance firms.
Search for Policies: Use online tools and databases specifically developed to Identify unclaimed life insurance benefits. The NAIC has a Life Insurance Policy Locator Service, among others, that can be extremely helpful in this task2.
Get In Touch With Insurance Companies: After you have found favourable policies, get in touch with the insurance companies. Get ready to supply proof of death, like a death certificate, as well any other paperwork they need.
File a Claim: Once you confirm there’s a policy in place, you’ll need to file a claim with the insurance company. Typically, this means submitting a claim application together with other documents such as identification and proof of kinship to the deceased.
Follow Up → It can take weeks for insurance companies to process claims. Constantly follow up to check whether your claim is moving forward and that any further need will be met quickly.
Utilizing State Resources
All states in the U.S. have an unclaimed property office where you can find unclaimed assets — including life insurance benefits. Such agencies keep databases of unclaimed property, including life insurance benefits. As part of your search, checking the unclaimed property office for your state can be a helpful resource. You can find absolutely EVERYTHING you need at the National Association of Unclaimed Property Administrators (NAUPA) which has complete directory of state resources3.
Statistics and Examples from the Real World
Unclaimed life insurance funds are a big problem. In 2019, for example, California solo paid back over $300 million in unclaimed property, including life insurance funds4. This illustrates the need for a proactive approach in claiming these benefits.
It takes some effort and determination to track down unclaimed life insurance money but it can be well worth it. Owing to the various reasons these funds remain unclaimed & the relevant steps described, beneficiaries can now reclaim what is rightfully theirs. The process can be made quicker by using state resources as well as online tools. More families will be financially protected with the knowledge that fewer benefits go unclaimed, as awareness of unclaimed life insurance funds grows.