There are instances where life insurance policies become unclaimed property due to the policyholder's failure to inform their beneficiaries or neglecting to keep up with payments. When this happens, the policy proceeds remain unclaimed and the beneficiaries remain unaware of their entitlement.
Unclaimed life insurance policies are not uncommon, and it’s important to understand how they are handled and what steps you can take if you think you may be the rightful beneficiary. If you have a beneficiary dispute attorney in South Dakota call us.
What is Unclaimed Life Insurance?
Unclaimed life insurance policies are those that have remained unpaid to beneficiaries for a certain period, usually between three to five years. When the policyholder passes away and the beneficiaries fail to make a claim, the policy becomes unclaimed property. According to the Insurance Information Institute (III), unclaimed life insurance policies are turned over to the state government for tracking down the rightful beneficiaries.
Once the policy is turned over to the state, it becomes property of the state in which it was purchased. The state will hold on to the unclaimed policy until the rightful beneficiary comes forward to claim it. This process ensures that life insurance proceeds are eventually paid out to the intended individuals, even if they aren’t initially aware of the policy.
Who’s Responsibility is it to Track Down Beneficiaries?
In most cases, the insurance company is primarily responsible for tracking down the beneficiaries of unclaimed life insurance policies. Here’s how the process generally works:
Initial Search by Insurance Company: The insurance company will first search its own records to identify the policyholder's next of kin or immediate family members.
State Involvement: If the insurance company is unable to locate any beneficiaries, they will then turn to the state unclaimed property office. Each state maintains a database of unclaimed life insurance policies and works to connect the beneficiaries with their policies.
Reaching Out to Beneficiaries: Once a potential beneficiary is identified, the insurance company or state unclaimed property office will make efforts to contact them. This typically involves reaching out to immediate family members, regardless of location, and then expanding the search to more distant relatives if needed.
If you believe you may be the beneficiary of an unclaimed life insurance policy, it’s important to take action and explore the various options available to you.
What is the Process for Claiming an Unclaimed Life Insurance Policy?
If you suspect you are the beneficiary of an unclaimed life insurance policy, there are several steps you can take to track it down and claim the benefits. Here's a step-by-step guide to help you navigate the process:
1. Check with the Insurer
Your first step is to contact the insurance company that issued the policy. You will need to provide information such as the policyholder’s name and date of birth. The insurance company will search their records to determine if they have any unclaimed policies associated with the policyholder. Many insurance companies have specific unclaimed property departments that handle these types of claims.
2. Search the State Unclaimed Property Database
If you can’t find the policy information through the insurer, your next step is to search the state unclaimed property database. Every state in the U.S. has an unclaimed property office that maintains a database of all unclaimed life insurance policies. The National Association of Unclaimed Property Administrators (NAUPA) is a helpful resource to access state unclaimed property databases and start your search.
3. Contact the State Unclaimed Property Office
If you locate a life insurance policy in the state database, the next step is to contact the state unclaimed property office to begin the claims process. The office will provide the necessary claim forms and instructions for you to follow.
You will need to fill out a claim form and provide proof of identity to verify that you are the rightful beneficiary. Once your claim is approved, you will be able to receive the benefits of the unclaimed life insurance policy.
4. National Association of Insurance Commissioners (NAIC) Search
If you are the beneficiary but are unsure which insurance company issued the policy, the National Association of Insurance Commissioners (NAIC) can help. They provide a life insurance policy locator service that can assist you in identifying the insurer. The NAIC can help track down the issuing company so you can proceed with the claims process.
Why You Should Act Quickly
The longer an unclaimed life insurance policy remains unpaid, the more complicated it can become to claim the benefits. The state will hold the policy proceeds, but if you don’t take action, the funds could eventually go to the state’s general fund after a set period of time.
By acting quickly, you can ensure that the life insurance proceeds are distributed to you or your family in a timely manner and avoid losing out on the death benefit. It’s important to regularly check the state databases, particularly if you suspect there might be an unclaimed policy.
Consulting a Life Insurance Lawyer
If you’re having trouble tracking down an unclaimed policy or if you encounter complications during the claims process, consulting with a life insurance lawyer can be helpful. An experienced attorney can assist with locating the policy, dealing with the insurance company, and ensuring that you receive the benefits you are entitled to.
Call us today.