Billions of dollars in beneficiary funds from deceased policyholders continues to go unclaimed in the United States.
In addition to policy benefits, many policyholders are entitled to demutualization compensation. Demutualization is the process of converting a mutual life insurance company, which is owned by its policyholders to a publicly traded stock company owned by shareholders.
Unclaimed policy benefits, including demutualization compensation are transferred to a government trust account until claimants surface. Last year government collected $22.8 billion, of which less than $1 billion was claimed.
Heirs continue to be entitled to receive whatever policy benefits may be due, but in addition, they receive stock, cash and/or policy credits in exchange for their ownership interest in the mutual insurance company.
The amount paid to each policyholder is based on length of time the policy has been in force, face value of the policy, and total premiums paid. For many policyholders, demutualization payment can be substantial. Millions of missing policy holders and heirs aren't aware they are entitled to receive demutualization compensation.
Regulators across the nation have cracked down and reached settlements with major life insurance carriers - including AIG® MetLife®, John Hancock, Prudential® and Nationwide® - that did not properly utilize the Social Security Administration's "Death Master File" to determine if a policyholder had in fact died.
When John Hancock demutualized, it did not have current addresses for 400,000 policyholders. Prudential could not find 1.2 million policyholders entitled to receive compensation and MetLife estimates 60 million shares of stock, worth billions of dollars, went unclaimed. Efforts to contact heirs are unsuccessful, due to name changes after marriage or divorce, unreported changes of address, expired postal forwarding orders and non-current beneficiary information.
Often carriers wait until being notified of a death instead of checking government records. Many times, individuals, such as family members, do not know they are a beneficiary, and therefore receive no payments.
Sometimes insurers use the master file to determine if an owner is dead so they can stop making payments, but do not use the same file to determine policyholder deaths in order to pay beneficiaries.
In some cases, premiums stopped when policyholders died, and the insurers used the policy's cash value to continue making payments, often until the cash was depleted.
Because it is the responsibility of beneficiaries to notify the life insurance company of a policy owner's death, more than one-quarter of all life insurance policy benefits go unclaimed. Family members simply aren't aware a policy exists, or don't know how to find it.
The National Unclaimed Property Network Reports on Unclaimed Insurance Money -
What Happens To Insurance Benefits That Go Unclaimed?
In general any unclaimed life insurance benefits, like other lost money, are turned over to the Unclaimed Property Divisions of the States. That process may take several years and doesn't begin until the insurance company is made aware of the passing of the insured. Typically, the insurance company will be allowed about three years to locate the beneficiary before being required to submit the unclaimed insurance to the respective state department. If you believe benefits are due you should first check with Unclaimed Property department of the State of residence of the policy holder. Also check any previous State of residence.
If You Have A Copy Of The Policy and Need To Locate The Company:
If the company listed on the policy has moved or changed its name, you should use our links to go to the Insurance Department of the State listed on the policy. These state departments will have current information about any changes for the company's name, address, and any other changes, so that you will know which company to contact and how to reach them. Often you will be able to search online. You can also contact the State Insurance Department by phone or letter to locate the company currently servicing the policy. Note the States will not have records of individual policies.
How to find a life insurance benefit if the policy is missing or lost:
Especially in the case of assisting an elderly loved one or settling the estate of a loved one, finding a lost policy can be very difficult. The National Association of Insurance Commissioners makes the following recommendations to help locate a policy.
To begin, gather personal details of the insured individual including full name, maiden name for a married individual, Social Security number and the state of residence when the policy would have been purchased if possible. Once a benefit is located you'll also need a copy of the death certificate. You need to determine the name of the insurance company and/or the name of the broker or agent who sold the policy.
Evidence of premium payments
Applications for insurance
Bills for premiums
Bank records of automatic deposits or payments
Where to look:
Credit card statements
Address books, files, safety deposit box
Hospital records - possibly health insurance has a death benefit
Loan records - there might have been credit life insurance Ask friends and neighbors about insurance agents or companies they might know about
Check with insurance agents for auto, homeowners, or other insurance held by the deceased. Often several type of insurance are purchased from the same agent or company.
Check income tax returns for interest earned from insurance policies.
Monitor mail for the succeeding year after an insured has passed for any billing for insurance premiums.
Contact the insurance company customer service or human relations department to obtain policy numbers and claim forms as may be appropriate.
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The Unclaimed Money Database is a Fast and Easy Way to See if you have Missing Money that is being held by the Government. You'll instantly search the National Unclaimed Property database. You can also be connected to every State's Unclaimed Property Agency so you can contact them by email or telephone to receive personal service in retrieving your money.
Remember the service is Free and there is a 30% chance that you'll find some Missing Money.