For many people, the scenario is familiar: You know your deceased relative had a life insurance policy, but you don't know who the insurer was, when the policy was issued, or how much it was worth.
The policy is out there — somewhere
Before
you shell out some bucks to hire a service to look for a lost life
insurance policy owned by your deceased relative, try these steps:
- Go
through canceled checks or contact your deceased relative's bank for
copies of old checks. If your relative wrote checks to pay premiums,
the insurer's name should be written on checks. Also, some banks sell
life insurance policies to customers who own checking or savings
accounts.
-
Contact the treasury department in the state in which the policy was
purchased. Death benefits can turn up there as unclaimed property,
usually after three to five years, but only when the life insurer knows
the insured is deceased.
- Check old credit card statements. Your relative may have paid premiums by credit card.
- Contact any past employers to see if your relative had group life insurance.
|
The prospect of looking for an old life insurance
policy can be daunting and frustrating. As a result, many people are
inclined to hire someone to do the searching. Search firms — or "heir
finders" as they are often called — specialize in finding unclaimed
life insurance death benefits. Most often, these search firms send
letters to insurance companies on a customer's behalf, asking the
insurer to turn over any policies in which a customer is the
beneficiary.
When
a policyholder dies, it is typical for a beneficiary to contact the
life insurance company to collect the policy proceeds. Make sure to ask
the insurance company whether that person had any other policies with
the company. Even though you might not be the beneficiary, the request
ensures the company knows it must search for the beneficiaries of any
additional policies.
If a beneficiary
does not make contact and the insurance company is not notified of the
insured's death, the policy might lapse and the death benefit is never
paid out.
In cases where the insurer
knows about the insured's death but cannot locate the beneficiary, it
must hand over the death benefit to the office of the state
comptroller. Insurers generally have to transfer the money to the state
within three to five years of the insured's death, though the time
period varies by state. (For more on this, read How to collect on missing life insurance policies.)
Once
the policy proceeds are turned over to the state, they are deemed
"unclaimed property" and you can collect the proceeds if you can prove
you are the beneficiary. States maintain databases listing the names
and addresses of beneficiaries who are heirs of lost policyholders. In
some states, the names and addresses of the beneficiaries are published
annually in local newspapers. Other states have Web sites where you can
enter the insured's name and look up any death benefit that's owed to
you.
You can also get help at places that assist with
unclaimed property. In addition to lost life insurance policies, these
firms can help locate lost funds in bank accounts, unclaimed tax
returns and lost stocks.
The National Association of Unclaimed Property
Administrators warns some individuals pose as heir finders in order to
take advantage of people. The organization suggests contacting
the unclaimed-property office and consumer protection division in your
state to check for any complaints or allegations of fraud against any
heir finder you consider hiring.
Life
insurance companies say they make strong efforts to search for
beneficiaries they cannot find, but point out those searches sometimes
fail.
Hiring
help to look for a lost life insurance policy can cost you a flat fee,
or a service might charge you 10 percent to 20 percent of the life
insurance proceeds — if anything is found.
Administrators
at state unclaimed-property departments — where some lost life
insurance policies end up — say there is nothing these search firms can
do that the average person can't — if you have the time.
Paul Archibald, a retired insurance professional in Virginia, runs a Lost Life Insurance Finder Expert
service. Archibald will fax letters to 460 customer service centers at
insurance companies, asking if your deceased relative had any life
insurance policies which designated you as the beneficiary. If the
insurer finds a policy, Archibald then asks the company to contact you
directly to start the claim process.
Archibald
acknowledges that people could send letters to life insurers
themselves, but notes that compiling the list of insurers is time
consuming and the postage would be costly. "If you had the list of
companies in front of you, it would take you 10 to 15 hours to print
out the letters and put them in envelopes. If you mailed them yourself,
the postage cost would be greater than my fee," Archibald says. "I can
do it for you, and do it faster than you ever could."
|
