This is a much more frequent problem than you would think: a person with valid life insurance passes away and no one knows how to collect because no one knows where the policy is or how to prove that it exists.
However, there are ways to find these misplaced documents and verify with the insurance company that the policy is in effect and that there are beneficiaries with the right to receive the established payout.
In this article, we are going to explain how to correctly search for and find a missing insurance policy. Keep reading to find out what to do in this situation.
Missing Insurance Policy: Table of Contents
Misplaced Policies: How Do They Get Lost?
Although it may seem strange, many people lose their insurance policies. Or maybe they were the only ones who knew that the insurance existed when they died, and so the beneficiaries do not know that they have a right to the death benefit or have many difficulties proving this right and collecting it.
Does this surprise you? Well, there are several reasons behind lost policies. First, life insurance policies are frequently undersigned by someone who is in their twenties or thirties, which is the most common time to take out a policy. Years and decades go by, payment of the premiums becomes automatic, and the insured forgets that the policy exists. If the insured dies at 70 or 80 years old, almost half a century will have passed since it was undersigned and it is quite possible that the insured no longer remembers where the documents are if he or she kept them.
It may also be that, over the years, this person has moved several times, forgetting to notify his or her change of address to the company, who will continue to send letters and other communication to obsolete addresses of which the family has no record.
It is also very common for the insured to have made changes to the list of beneficiaries.
Sometimes, the original beneficiaries die and are replaced, or changes are made due to divorce or other motives. If these changes are not notified, the new beneficiaries will not be informed or will have incomplete information.
Nor is it strange for someone to have several life insurance policies, some bigger than others. This may be the result of a 'laddering’ strategy or simply an accumulation of products that were personalized according to growing coverage needs. In these cases, it is common for smaller policies to be forgotten and fail to be collected when the insured dies.
Fortunately, insurance companies are very cooperative and are ready to help the beneficiaries. In fact, the majority of them periodically search for deaths among the people they insure to begin the process of beneficiary payment. Nevertheless, beneficiaries are always the ones who must claim their money, and the legal periods to do so tend to vary between one and seven years, depending on the state.
Once this time has passed, the collection process may be very complex legally. Either way, it is important to know that the company cannot keep the benefits. Once the legal claim period has passed, it must be handed over to state authorities, which will handle it as an unclaimed asset.
Therefore, it is in your best interest to know the legal claim periods. The best thing to do is to find the policy as soon as possible and claim your payout.
How to Find a Missing Insurance Policy
There are many ways to look for signs of a life insurance policy that is otherwise undocumented because the papers have been lost. The most common are the following:
- Bank statements. The clearest leads tend to be at the bank, where life insurance policy premiums are paid. If you have access to the deceased's account statements, look for these payments and you may find the name of the insurer and a solid lead for claiming the payout. Incidentally, you will also know if the policy is in effect because you will see whether the premiums were paid regularly.
- Search online. One effective way of finding a lost policy is by using the online search engine of the NAIC, or the National Association of Insurance Commissioners. Using this service (https://eapps.naic.org/life-policy-locator/#/welcome) you can perform searches to locate missing or unknown policies.
- Search on MIB. The MIB group has a database of life insurance quotes and applications dating back to 1996. Insurance companies are using it to exchange useful information on underwriting processes. This may be a good place to find what you are looking for.
- Check the mail. Insurance companies frequently send out periodic reports to their customers with the status of their investment accounts associated with permanent life insurance. They may also send advertising materials, information on their shareholder meetings, and other reports. These often-forgotten letters may be the key to finding the company that undersigned the lost policy.
- Speak with lawyers, advisers, executors. Many people share details with their lawyers or financial advisors that they do not disclose to their families. If the deceased had a lawyer, an adviser, or appointed an executor or trustee for his or her will, try to speak to them. It is likely that one of them knows of the existence of a life insurance policy that you are unaware of.
- Check other policies. If the deceased left a policy behind that you do know about, carefully look through the documentation that came with it. These frequently contain lists of other, similar products that the insured already had when the policy was taken out.
- Ask your state government. States have programs that are responsible for handling unclaimed assets. These institutions receive uncollected life insurance benefits and handle them until the legitimate beneficiaries appear.
- Check their tax statements. Indications of a policy may appear on tax statements. These tend to come in the form of rebates, so pay special attention to tax returns.
- Contact the employer of the deceased. If the deceased was working, or had been working, for a company that had group life insurance, you can consult with the heads of the company to find out if the policy is still in effect or if it was transferred to the insured at any point.
Once you have a clear lead, you can approach the insurance company. But do not show up empty handed: make sure you bring all of the information you could gather on the person that died, including their full name (both maiden and married names for women), social security number, death certificate, and any other relevant information. With all of this material, you can now submit a claim with the company for payouts to beneficiaries.
And remember, you can claim benefits even if the policy was not in effect. It can happen that the expired policy retains some cash value that has not been withdrawn, or any other type of accrued benefit, which is money that the inheritors of the deceased have the right to receive.
Advice on How to Avoid Losing an Insurance Policy
Of course, the best way to avoid these problems outlined here it to prevent the policy from getting lost in the first place. To this end, we offer some advice that will ensure your loved ones are informed of coverage in the event of your death:
- Notify your beneficiaries. As we have seen, one of the biggest mistakes you can make when taking our a life insurance policy is to fail to inform your beneficiaries of their status. Explain that the policy exists and that they are beneficiaries of all or part of the payout.
- Do not leave the policy in a safe deposit box. Many people believe that the best way to safeguard a policy is to store it in a safe deposit box, a strongbox in a bank. This is a mistake, because those boxes cannot be opened until the will and inheritance of the deceased are completely legalized. This process can go on indefinitely, so the policy can remain in the box, untouched.
- Update your information with the insurer. If you change your residence, do not forget to notify the company of your new address. This way, the letters sent to you will arrive at their destination correctly.
- Save the documentation. In addition to storing the policy in a place that is known to your loved ones, also save any other documents that might clear up any doubts: reports from the insurer, banking statements, and anything that may help identify your life insurance policy.
As you can see, there are ways to prevent an insurance policy from going missing. You just have to take some basic precautions. If it still gets lost, it is a matter of following some specific steps to find the right lead and recover the connection to the insurer.