A relative has just died. He had a life insurance policy with you listed as the beneficiary. There’s just one problem: the life insurance policy is missing. You have no idea which insurance company wrote it.

 

If you find the missing life insurance policy 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 the lost 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 life insurance 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 life insurance 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 life insurance 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 life insurance beneficiaries.

 

Many states will try to contact life insurance 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.

 

Unclaimed 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.

Tips for making sure your life insurance beneficiaries get your death benefit:

 

1. Give your beneficiaries your policy information. It can be a difficult and awkward conversation, but an important one.

 

2. 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.

Tips for looking for lost life insurance policies:

 

1. Go through canceled checks or contact your relative’s bank for copies of old checks. Look for checks made out to insurance companies.

 

2. Ask those who may have known about your relative’s finances. Speak with the relative’s lawyer, banker or accountant. Also contact the relative’s insurance agent.

 

3. 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.

 

4. Check the mail for a year. Premium bills and policy-status notices are usually sent annually.

 

5. Look at income tax returns for the past two years. Check for interest income from policies or expenses paid to life insurance companies.

 

6. 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 that might show if insurers requested your relative’s medical information within the past seven years. Record searches can be requested through the MIB’s Policy Locator Service and cost . The MIB says that nearly 30 percent of searches turn up leads.

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Question by Financial JUSTICE: What type of life insurance do you have and why you have it?
I used to own whole life insurance until I learned the hard way about the truth behind it. A life agent said cash value was a great way to build savings for retirement and that I can use it anytime. That sounded pretty great and so me and my husband bought it. About 28 years later, he died in an accident. The life insurance paid the death claim about 30 days after I filed a claim. But all the cash value was gone! With the cash value, I could of used it for my retirement.

So now I got rid of my whole life and paid a surrender charge on the cash value. The mortgage is paid off and no one is dependant on my income anymore. So I don’t need life insurance. I moved about $ 45,000 of cash value into various investments.

All I have to say to people buying life insurance is do your own research about life insurance before listening to life insurance agents.

Best answer:

Answer by kamaljot85
Myself, my mother and brother all have whole life insurance policies. We have to pay our policies for certain amount of years and it seems more beneficial to us compared to a term life policy or an universal life policy. My brother started his policy when he was 20 and I started mine when I had turned 21. My brother’s policy after a few years had built up a significant amount of cash value. We have it only because it is better then having a term policy, the cash value isn’t are goal and it is just a perk on the side. We have retirement accounts that meet our needs for retirement. What pushed us to buy insurance policies in the first place was my cousin who is an insurance agent. After my father passed away, we all jumped on the band wagon for insurance policies. When we grow older and have families our policies premiums would be paid in full and it will give us a sense of security for our loved ones if we were to pass away. Every time I listen to my insurance agent, I make sure I take it with a grain of salt.

I am sorry for your loss, and the frustration you went through afterward to receive the settlement you were entitled to.

What do you think? Answer below!

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Question by livinlife: Life Insurance?
My husband, 32 and I, 30 are looking into life insurance. Can anyone tell me which company or websites I can use to get information. There are so many out there… wouldn’t know where to start. Who do you personally use? Is there a medical exam involved? What type of premiums are you paying? Is it fixed or does it go up every few years? We live in Florida also. Any help would be appreciated.

Best answer:

Answer by roxann s
Look for term insurance not whole life – a much better value for your money – you want death protection not investment out of insurance – invest in investment programs (401 – Roth IRA ETC) not life insurance – only purchase term insurance to cover the loss of an income to protect your family

Give your answer to this question below!