It’s one thing to know that your aunt left behind a life insurance policy to cover her final expenses and provide for her heirs. It’s quite another to locate the paperwork that proves it.
Indeed, life insurance policies are often purchased in one’s 20s and 30s when marriage and children enter the picture, which may be decades before the policy pays out. Documents can easily get lost, misfiled, or forgotten. This is particularly true if the policyowner failed to give the life insurance company a forwarding address when he or she moved, kept spotty financial records, or suffered a decline in cognitive function late in life.
At other times, when you lose loved ones, it might be difficult to begin addressing their final affairs due to grief, other life obligations, or complexity. (Related: What to do when a loved one passes)
Fortunately, most people are successful in locating life insurance policies in times of need, making a claim to the insurer, and receiving their benefit. The American Council of Life Insurers reports that life insurance companies paid out more than $100 billion to beneficiaries of life insurance policies, and roughly $98 billion to annuity holders in 2021, both record highs for a single year..1However, “sometimes people just forget,” said Michael Barry in an interview, a spokesman for the nonprofit Insurance Information Institute (III). “If they purchased a small whole life policy long ago when they first got married and then bought a much larger whole or term life policy when they started a family, they may simply have forgotten about the first one.”
How to find a lost life insurance policy
Today, most life insurance companies now conduct public record searches to determine if an insured is deceased. If the company discovers a death, it must pay the beneficiary within a specific period of time; these periods differ by state and can range from one to seven years. If payment is not made to a beneficiary within the required time frame, the insurer must report the unclaimed benefit to the state. At that point, a beneficiary would need to engage in an often complex process of seeking payment of the unclaimed property. Working with the insurance company to complete a life insurance claim is usually simpler and quicker, so making a timely claim is important.
Sometimes, life insurance policies have been lost for decades. It’s worth noting that beneficiaries who track long lost policies down typically don’t strike it rich. The most recent data available from Consumer Reports suggested that the average unclaimed life benefit was $2,000, but a few are valued at up to $300,000 or more. 2
Fortunately, it’s often easy to determine whether you may be entitled to benefits when a loved one passes away by turning over a few stones. State regulators and online resources are also readily available to help immediate family members and close relatives locate unclaimed benefits.
Conduct a paperwork hunt
Start by searching your deceased family member's financial files, bank statements (for premium payments), safe deposit box, and canceled checks for payments to an insurance company, or tax returns (for any reported interest expense related to a policy loan.)
Keep an eye out, too, for correspondence from insurance companies. Many companies send annual statements to policyholders. Also, when premium payments are missed, insurers generally attempt to contact policyholders or policyowners by letter or sometimes email.
Contact the deceased’s financial professional or estate planning attorney, who may know of a policy, especially if it funds a trust or business transfer.
But don’t limit your search to an individual life insurance policy.
The deceased may have had a group policy through work or a prior job. Thus, a call to his or her former employers, union welfare office, or benefit administrator is a wise next step.
If the deceased had expressed wishes to use a particular funeral home, ask if the funeral home director was informed of an insurance policy being available to pay for final expenses.
Insurance regulators, through the National Association of Insurance Commissioners (NAIC), suggest that, if you do find a life insurance policy, but suspect that your loved one had other policies, look closely at the documentation attached to the policy or policy references on the correspondence. It may include a list of any other life insurance policies issued to your loved one.
According to the Insurance Information Institute, your search will be easier if you know at least the basics. Gather all the personal details of the insured individual including his or her full name (maiden, too, where relevant), Social Security number, the name of the insurance company that issued the policy, and the state where the policy was likely purchased. It also recommends that you have a certified death certificate available to help expedite the company’s claims review. Death certificates can generally be obtained from the funeral home. (Related: Funeral costs and considerations)
If you determine that the deceased let his or her permanent life insurance policy lapse (be it whole, universal, or variable), it may still be worthwhile to contact the company regarding a claim, as there may still be some remaining cash value, though it will likely not be the full value of the policy.3
Barry said it’s important to note that unclaimed life insurance benefits are not property of the insurance company. When beneficiaries cannot be found after a certain length of time, the insurer must turn over any undistributed proceeds to the state officials who administer unclaimed property programs.
“That’s one thing that gets lost in the media coverage,” said Barry. “If a life insurance policy doesn’t pay out upon the policyowners’ death, the company doesn’t keep the money on their books. State unclaimed property programs are one way for potential beneficiaries to look for a lost policy or for any assets with their name on it.”
That said, many beneficiaries assume the insurance companies will come find them. That is not always the case.
As noted above, insurance companies are increasingly using the federal death reports published by the Social Security Administration either voluntarily or as required by new laws enacted in over 20 states. In the case of a match, companies will reach out to beneficiaries and assist them with making a claim. However, not all states require such searches. While this may be a new requirement for some, MassMutual has been checking these federal death reports since the 1980s.
Search for lost life insurance policies online
If, after reviewing the records described above, you do not locate a life insurance policy, don’t give up.
The next best step is to use the NAIC’s free Life Insurance Policy Locator Service, designed to help consumers locate missing life insurance policies and annuity contracts of deceased family members. Individuals who believe they are beneficiaries, executors, or legal representatives of a deceased person may submit a search request form.
The NAIC will ask participating companies, on your behalf, to search their records for any policies or contracts owned by the deceased. It will also ask participating companies that have policy information to respond to the requester if they are the designated beneficiary or authorized to receive information.
To claim any benefit, if one is found in your name, you’ll also need a copy of the deceased’s death certificate.
State treasure hunts
If you know which state or states your loved one lived in as an adult, or can narrow them down to a few, try reaching out to the insurance departments in those states to inquire about lost policy search programs.
Immediate family members and close relatives of the deceased can also try searching for their family’s missing, lost, and unclaimed property on missingmoney.com, a free database of governmental unclaimed property, money, and assets operated by the National Association of Unclaimed Property Administrators (NAUPA).
According to the most recent data available from the NAUPA, the states return more than $3 billion of unclaimed assets to their rightful owners annually .4
Those assets include not just life insurance policies and annuities, but savings and checking accounts, stocks, payroll checks, trust distributions, and the contents of safe deposit boxes, among other forms of financial property. You may luck out.
An avoidable problem
Barry is fast to note, however, that lost life insurance policies need not be a source of frustration for future beneficiaries. “This is a preventable problem,” he said. “Let your beneficiaries know if you have life insurance and that they are listed as the beneficiary.”
Indeed, the NAIC suggests all policyowners update their beneficiary forms after every major life event (including a death, birth, or divorce), ensure their insurance company and agent have current contact details for all beneficiaries, and place a current copy of their policy with their will or estate paperwork in a safe place where family or beneficiaries will know to look for it. (Related: What loved ones need to know)
However, don’t place life insurance policies in a safe deposit box, the III recommends, especially if the proceeds may be needed immediately to help cover your final expenses. Why? Safe deposit boxes are temporarily sealed after individuals pass away until their estate is settled in probate, which can drag on for many months.
By being transparent with your beneficiaries, you can help ensure that the policy you paid for, and the benefits to which your loved ones are entitled, don’t someday languish in the lost and found.
“It’s a conversation that people understandably avoid as death is a sensitive topic, but it’s an important one to have,” said Barry.
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This article was originally published in February 2016. It has been updated.