If you buy a life insurance policy and die while it’s active, the death benefit goes to the beneficiary. To receive the death benefit, the beneficiary sends in a claims form and copy of the insured’s death certificate to the insurance company. The insurance company validates the death and then sends out the death benefit check.
But what if the beneficiary doesn’t contact the life insurance company after the death of the insured? Does the insurance company track down the beneficiary? Not always.
The Model Unclaimed Life Insurance Benefits Act
Some states follow the Model Unclaimed Life Insurance Benefits Act. This Act states that an insurer shall cross-reference the insureds of their life insurance policies against a Death Master File on at least a semi-annual basis.
The “Death Master File” refers to the U.S. Social Security Administration’s database file used for reporting deaths.
If an insurer finds a potential match, within 90 days, they are to use good faith efforts to:
- Confirm the death of the insured,
- Determine whether benefits are due,
- Provide the appropriate claims forms or instructions to make a claim to the beneficiaries.
If the insurance company cannot locate the beneficiary, the death benefit reverts to the state. The state holds the unclaimed property until beneficiary makes a claim for it.
Not all U.S. states have adopted the Model Unclaimed Life Insurance Benefits Act. But all states have adopted unclaimed property laws of some kind.
The Revised Uniform Unclaimed Property Act
Most states follow the Revised Uniform Unclaimed Property Act (RUUPA). This act requires insurance companies to turn over unclaimed life insurance benefits to the insured’s state.
The state then holds onto the property for safe keeping until the beneficiary makes a claim on it. The property is also reported to the unclaimed property website of that state. Unclaimed.org allows anyone to easily search if there is unclaimed property in their name and submit a claim.
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Am I a beneficiary of a life insurance policy?
Do you think you may be due money from a life insurance policy? Or perhaps you’re just not sure?
The American Council of Life Insurers (ACLI) suggests the following:
- Sort through the deceased’s papers and address books for clues.
- Look through bank checkbooks and/or canceled checks to see if any were written to pay premiums.
- If you find a policy, contact the insurance company even if you’re unsure whether it is still inforce. Don’t forget that for most inquiries you’ll need a death certificate and documents that prove your status as a close relative or intended beneficiary of the deceased.
- Call the employee benefits office at their last and previous places of employment, or check with the union welfare office, if applicable.
- Review income tax returns for the past two years to look for interest income and expenses.
- Contact any law offices where the deceased may have been advised.
- Check the mail for up to one year after death for premium notices, which are usually sent annually. If the policy is paid-up, there may not be any notice of premium payments due. However, you may find an annual statement regarding the status of the policy, or even a notice of dividend.
- If the death is an old one, check with the deceased’s state’s unclaimed property office to see if any money from life insurance policies may have been turned over to the state.
The National Association of Insurance Commissioners (NAIC) offers a free policy locator service.
The NAIC will ask participating companies to search their records to determine whether they have a life insurance policy or annuity contract in the name of the deceased that you entered. They will also request that any companies that have policy information to respond to you if you are the designated beneficiary or are authorized to receive information.
This process can take months. While you wait, it’s recommended you try the steps in the above bulleted list.
There’s no statute of limitations for claiming life insurance benefits. Whether it’s been months or years that have passed since your loved ones died, you still have a right to claim the funds.
How can I make sure my beneficiaries receive my policy’s death benefit?
Buying life insurance is a form of financial protection for your loved ones. If you die, you want to make sure your family doesn’t suffer financially, and this is a selfless and loving decision.
However, be sure to share with your family that you have life insurance. Understandably, it’s not the greatest subject of discussion “Hey, kids, I bought life insurance. Here is where the policy is and what you need to know if I die.” But this conversation is vital.
Your partner and children may respond with, “I don’t want to talk about you dying.” And this response is valid, but stay the course. Your beneficiaries need to know what to do if you die unexpectedly.
This conversation can be brief. It doesn’t need to turn into an emotional discussion. Tell them where the policy is stored and how to contact the insurance company. That’s all you need to do.
Taking just a few minutes out of your day to do this can save them hours of grief and uncertainty in the future. “Did dad have a life insurance policy?” “How are we going to pay for mom’s funeral? Was there life insurance?” “Do we have to sell the house now?” These are sentences you can avoid by being open with your family.
Don’t rely on the insurance company to track down your beneficiaries, even if you live in a state that has adopted the Unclaimed Life Insurance Benefits Act. This process isn’t a quick one.
As mentioned earlier, states that have adopted this act typically only check semi-annually. Then there’s the process of validating and hunting down the beneficiaries. These steps take time and your family may need the death benefit much more urgently than that.
Buying life insurance is an act of love. Don’t keep it a secret.