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How to find out if you're the beneficiary of a life insurance policy
Jane Smith's parents died suddenly within two months of each other. After the initial shock, she finally started digging through a closetful of bills and legal documents dating back to the late 1940s. She found paperwork alluding to a life insurance policy -- but not the policy itself.
Jane Smith (not her real name) is not alone in her quandary.
Life insurance policies can go unclaimed because it is the family members' responsibility to notify the insurance company when the policyholder dies; the insurer will not make an effort to locate beneficiaries – the company doesn’t even know an insured has died.
Seeking life insurance information
Because policyholders often have an aversion to talking about their own death or discussing who's going to inherit money, say lawyers, beneficiaries might not even know a policy exists. That’s why it’s so important for policyholders to reveal life insurance information before they die.
MIB Solutions, which tries to locate policies for beneficiaries through its database of life insurance application data, says that "it is possible, if not likely, that millions of dollars in life insurance goes unclaimed."
When Smith contacted the life insurance company, she learned about certain stringent ground rules for collecting on the policy: Insurers require a death certificate with a raised seal and a probated will. If there were other beneficiaries, the distribution would be made equitably – and not by her.
Life insurance companies try to be helpful in tough times such as these.
"We are obligated to honor the terms of life insurance contracts, and anyone with questions about a policy should contact the company that issued it," says Whit Cornman of the American Council of Life Insurers (ACLI), an industry trade group.
But if you’re unsure whether you’re the beneficiary of a life insurance policy, you may be at a dead end if you don’t have a copy of the policy or know which company issued it.
Your own life insurance search
The ACLI has a number of tips for those who think they might be due money from life insurance policies.
- Sort through the deceased's papers and address books for clues.
- Look through bank check books 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 in force. It's helpful to contact life insurance companies directly by using a list from either the state insurance department or Best's Insurance Reports found in most libraries. Don't forget that for most inquiries -- like Smith’s -- 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 warranted.
- Review income tax returns for the past two years to look for interest income and expenses.
- 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.
If you strongly believe you may have a life insurance claim but proving it is difficult, the ACLI suggests that you try the Policy Locator Service from MIB Solutions. Here the deceased's name is matched against roughly 170 million records. If the policyholder applied for the policy in 1996 or after, you might find it here. Executors and administrators are entitled to order a report, but in cases where neither is available, a surviving spouse or closest relative has the right. Reports cost $75 and MIB says searches receive a 30 percent response rate.
One of the best resources may be other relatives. Life insurance is part of most inheritances, and where there's a will, there's a relative. After someone dies, everyone has an interest in seeing his or her affairs settled, particularly when there are funeral expenses to be paid.
More from Ed Leefeldt here