Friday, May 29, 2009

How to collect on missing life insurance policies

A relative has just died. He had a life insurance policy with you listed as the beneficiary. There's just one problem: You can't find it. And you have no idea which insurance company wrote it.

If you find it in the future, are you still eligible to receive the death benefit?
Hope they paid their insurance bills
If you're a beneficiary and you find a life insurance policy shortly after the insured dies (within six months to a year, for example), claiming the death benefit should be trouble-free.

First, determine if the insured had term or permanent life insurance. If the insured held a term policy, you'll receive the death benefit if he died before the end of the policy term. If he died after the policy expiration date, you would get nothing.

If the insured had a permanent life policy, you'll receive the money if the death occurred while the policy was "in force," meaning all premium payments were made up until the time of death. If the death was a while ago, you'll receive the benefit with interest from the date of death.

If the policy lapsed — meaning the insured stopped making premium payments before he died — there's a chance you might get nothing. When a permanent life insurance policy lapses, most insurance companies switch its status from permanent insurance to one of two options:

* "Extended term": The insurance company uses the cash value of the policy to buy a term life insurance policy for the same death benefit using the cash value of the policy. The death benefit will continue for the longest period the cash value will purchase.

* "Reduced paid up": The insurance company will keep the policy in force permanently, but will reduce the death benefit.

Gerry Brogla, an actuary for State Farm, says in the majority of the cases at his company, the permanent policy continues as extended term if it lapses. At State Farm, extended term is the default option for most permanent policies.

If the policy lapses, and the extended-term period expires before the insured dies, the policy is worthless and the beneficiary will get nothing. If the insured dies before the extended-term period is up, the beneficiary will receive the death benefit.

If the policy lapsed because the insured died (thus ending premium payments and causing the insurance to be placed in extended-term status), the beneficiary will still collect the full death benefit, regardless of when the extended term was up. The beneficiary always needs to supply the insurance company with a death certificate to verify the date of death.

There is no time limit during which a beneficiary must step forward to collect the money, according to Jack Dolan, spokesman for the American Council of Life Insurers. "If a person shows up 30 years after (the insured's) death, the company still makes good on it," Dolan assures.

What happens if no one ever reports the death?
If the insured dies and the insurance company does not learn of the death, the policy lapses. Insurance companies will take steps to find out why a policyholder stopped making payments. When an insurance company stops getting payments, it sends letters to the insured informing him the policy may lapse as a result of unpaid premiums. If the letters go unanswered, the company might initiate a search to find the insured. If that comes up empty, the company will then lapse the policy.

If a beneficiary to a policy never steps forward, it unfortunately means the insured paid money to a policy throughout his life and his beneficiaries never see a penny. This is why its a good idea to make sure beneficiaries are aware of any life insurance policies you have.

If you're lucky, the state may have your money
In some cases when a beneficiary fails to claim a death benefit for several years, the money is transferred to the state where the insurance policy was purchased under the escheat laws.

If a company knows an insured died and it cannot find the beneficiary, it must turn the full death benefit over to the state comptroller's department within three to five years of the insured's death. The money is transferred to the state where the insured bought the policy. The money is considered "unclaimed property" and gets lumped in with dormant bank accounts and uncollected rent deposits. The comptroller's department maintains a database that lists the names and addresses of lost beneficiaries.

Many states will try to contact beneficiaries in an effort to pay the death benefits. In Texas, for example, the names and addresses of the beneficiaries are published annually in each county in the state. In New York, the Web site of the New York State Comptroller's Office of Unclaimed Funds has an online search to find any unclaimed death benefits owed to you. You can find out the procedures in your state by contacting the office of your state comptroller or treasurer.

Keep in mind your chances of finding the policy with the state are slim. The insurance company has no obligation to hand the money over to the state if it's unaware the insured died. In most cases, it's the beneficiary who contacts the insurance company.

If you're lucky, the state may have your money
In some cases when a beneficiary fails to claim a death benefit for several years, the money is transferred to the state where the insurance policy was purchased under the escheat laws.

If a company knows an insured died and it cannot find the beneficiary, it must turn the full death benefit over to the state comptroller's department within three to five years of the insured's death. The money is transferred to the state where the insured bought the policy. The money is considered "unclaimed property" and gets lumped in with dormant bank accounts and uncollected rent deposits. The comptroller's department maintains a database that lists the names and addresses of lost beneficiaries.

Many states will try to contact beneficiaries in an effort to pay the death benefits. In Texas, for example, the names and addresses of the beneficiaries are published annually in each county in the state. In New York, the Web site of the New York State Comptroller's Office of Unclaimed Funds has an online search to find any unclaimed death benefits owed to you. You can find out the procedures in your state by contacting the office of your state comptroller or treasurer.

Keep in mind your chances of finding the policy with the state are slim. The insurance company has no obligation to hand the money over to the state if it's unaware the insured died. In most cases, it's the beneficiary who contacts the insurance company.

Also, the insurer only transfers the money to the state three to five years after it cannot find the beneficiary but knows the insured died. If the state doesn't have the death benefit, it's likely the insurer is still looking for the beneficiary or doesn't know the policyholder has died.

Death benefits are rarely transferred to the state. Dave Potter, a spokesman for Hartford Life, says less than 1 percent of his company's death benefits go unclaimed.

Del Chance, a life insurance claims manager at State Farm, says, "Turning over life policy benefits to an individual state after the death of an insured is extremely rare. State Farm utilizes their own search techniques as well as outside vendors to locate lost beneficiaries in the event of the death of one of our insureds. By and large these procedures have always located the beneficiary."

How to look for lost life insurance policies
Finding a policy may take some digging, but start here:

* Go through canceled checks or contact the insured's bank for copies of old checks. Look for checks made out to insurance companies.

* Ask those who may have known about your relative's finances. Speak with the person's lawyer, banker or accountant. Also contact the insurance agent. They may know where the insured bought life insurance.
* Contact your relative's past employers. They might know of possible group life insurance. The insured might have also purchased supplemental life insurance through work.
* Check the mail for a year. Premium bills and policy-status notices are usually sent annually.
* Look at income tax returns for the past two years. Check for interest income from policies or expenses paid to life insurance companies.
* Contact the Medical Information Bureau. If your relative bought life insurance fairly recently, there might be a trail of the companies to which he applied. The Medical Information Bureau (MIB) maintains a database dating to 1996 that might show if insurers have requested your relative's medical information. Record searches can be requested through the MIB's Policy Locator Service and cost $75. The MIB says nearly 30% of searches turn up leads.

Two ways to be sure your beneficiaries get your death benefit:

* Give your beneficiaries your policy information.It can be a difficult and awkward conversation, but an important one.
* Keep all your financial records (especially your life insurance policies) in one place. Don't force your beneficiaries to search your house from top to bottom after you die.

10 comments:

  1. Shows why it's absolutely essential to keep your paperwork regarding insurance policies etc along with your will and let your family or friends know where to find them in case anything happens. Nobody ever wants to think about their own deaths but you can leave behind such a headache for your family if you aren't prepared!

    ReplyDelete
  2. Hello, I have visited your interesting blog,come and get you advertising on my blog.Put your link in comments,or in followers,on my blog pass visitors from other countries.Hello http://car-in-dream.blogspot.com/

    ReplyDelete
  3. Thanks for sharing the information on life insurance.

    ReplyDelete
  4. I have never thought of this situation, and also this can happen to anyone. That is why it is always suggested that when buying a insurance policy all the documents should be made carefully. But the points that are listed will be a great help if someone lost it. Thanks
    commercial insurance company

    ReplyDelete
  5. I have never thought of this situation, and also this can happen to anyone. That is why it is always suggested that when buying a insurance policy all the documents should be made carefully. But the points that are listed will be a great help if someone lost it. Thanks
    commercial insurance company

    ReplyDelete
  6. Hi, Nice post thanks for sharing. Would you please consider adding a link to my website on your page. Please email me back. Thanks!

    Aaron Grey
    aarongrey112@gmail.com

    ReplyDelete
  7. Aladin88 adalah Master Agen Betting Online Terpercaya. Kami menyediakan jasa pembuatan account betting online dari permainan SBOBET, IBCBET, 368BET (CMDBET), Winnning FT, Ubobet, SBO Casino 338a, Ion Casino, CBO855, Tangkasnet, Tangkas88, 9Joker, Klik4D, Isin4D, dan AsiaPoker77.
    YM: cs1.aladin88@yahoo.com
    Pin BB: 2B1D5AD1
    WeChat : aladin88cs
    Whatsapp: +855962761968
    SMS: + 6281287457208

    ReplyDelete
  8. Mari bergabung bersama ASIANBET77.COM Disini kami menyediakan berbagai macam jenis permainan betting online, seperti Taruhan Bola Online, Casino Online, Togel Online, Sabung Ayam Online dan masih banyak lagi game taruhan online lainnya....

    Pendaftaran gratis tidak dikenakan biaya apapun juga, minimal Deposit sangat ringan, hanya dengan Rp 100.000 saja anda sudah bisa bergabung bersama kami. ASIANBET77.COM bekerja sama dengan bank lokal yakni BCA, MANDIRI & BNI. Sehingga memudahkan anda untuk bertransaksi bersama kami.

    Customer service kami yang Ramah dan Profesional akan siap membantu anda selama 24 jam full, ayo segera daftarkan diri anda bersama kami ASIANBET77.COM. Dan dapatkan promo2 menarik dari kami.untuk keterangan lebih lanjut silahkan hubungi CS kami :

    YM : op1_asianbet77@yahoo.com
    Wechat : asianbet_77
    sms center : +639052137234
    pin bb : 2B4BB06A

    ReplyDelete
  9. www.indobet77.com

    Master Agen Bola , Casino , Tangkas , Togel Terbesar
    dan Terpercaya Pilihan Para Bettor

    Promo Terbaru :
    - Bonus  10% New Member Sportsbook
    - Bonus 5% New Member Casino Online
    - Bonus 10% Setiap Hari Bola Tangkas
    - CASHBACK untuk Member
    - BONUS REFERRAL 5% + 1% Seumur Hidup

    untuk Informasi lebih jelasnya silahkan hubungi CS kami :
    - YM : indobet77_sb2@yahoo.com
    - EMAIL : indobet77@gmail.com
    - WHATSAPP : +63 905 213 7238
    - WECHAT : indobet77
    - SMS CENTER : +63 905 213 7238
    - PIN BB : 2B65A547 / 24CC5D0F

    Salam Admin ,
    http://indobet77.com/

    ReplyDelete