Can't Find Your Life Insurance Policy?

When a relative suddenly passes away, the time after can become frantic and harried. A beneficiary to that relative may have no idea where their life insurance policy was kept. As long as you find it in the near future, you will still be able to lay claim to the death benefits. But what do you do if you just can't locate it? Here are some tips from Insurance.com on what to do if a life insurance policy suddenly disappears.

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-Go through any canceled checks you can find to see if any of them have been made out to a specific insurance company. If you can't find any, go to the bank and request copies of any old checks they may have, or bank statements.

-Talk with the deceased's lawyer, their insurance agent, or their accountant to see if they can provide you with any information on the finances of your relative.

-Inquire of their old employer to find out if there was any group life insurance provided to them.

-You can call the Medical Information Bureau (MIB) - which is an organization that keeps a database that will show if insurers requested your relative's medical information. The MIB will most probably have a paper trail that can be followed if your relative has bought a life insurance policy in the last seven years.

Naming a Beneficiary
Naming a beneficiary to take care of your assets after your death is of great importance. You will want to do the following things:

-Provide the beneficiary with all of your life insurance policy details. Make sure they have the policy number, insurance agent's name, company phone number an even an email address so they can always get a hold of them.

-Keep all of your records together in one spot. Try and keep both medical and financial policies and papers together in one place, that way it makes it easy for the beneficiary to find what they are searching for.

Different Kinds of Policies
There are different policies that may be in effect. These are:

-Term policy - someone who has a term life insurance policy must pass away before the policy expiration date for the beneficiary to receive any benefits. If death occurs after the expiration date, the beneficiary will not receive anything.

-Permanent policy - as long as the policy is in effect at the time of death the beneficiary receives death benefits. If the relative has died a while ago, benefits can still be received along with the interest it has collected from the date of death.

-Lapsed policy - this policy depends if your relative had a term life insurance policy or a permanent life insurance policy. If they had stopped payments to the company and the policy lapsed, the insurance company will switch the status to either “extended term” or "reduced paid up".

1. Extended term - Extended term refers to the use of any built up cash value to purchase a short-term life insurance policy. If it expires before the insured passes away, the beneficiary to the policy will get nothing. If the insured member dies before the expiration of the policy, then the beneficiary will indeed collect on the benefits in the agreement.

2. Reduced Paid Up - Reduced paid up refers to when the life insurance company reduces the benefits to be received, but allows the policy to stay in force.

If the policy indeed lapses because the insured passes away, the beneficiary will receive full death benefits according to the policy. Plus, there will be no time limit that the beneficiary can collect the benefits. To collect, the death certificate must be presented to the insurance company to verify that the insured has died. No one will receive the money in the policy if the beneficiary does not come forward to collect on it.

Unreported Death
The insurance company must be informed when the policyholder passes away, or the policy will lapse. If this happens, letters will be sent warning the policyholder that the policy will discontinue if payment is not received. When the insurance company does not get a response, they will automatically allow the policy to lapse. Some companies may initiate a search, but it is unlikely.

Unclaimed Benefits
What happens to benefits through an insurance company that go unclaimed? If the beneficiary does not collect on their benefits, or the life insurance company is not able to find the beneficiary after a few years, the money becomes property of the state. The state where the policy was originally purchased will collect the full amount, turned over to the state comptroller department. This will happen usually within three to five years of the insured death. It will then be put into a bank account and labeled as "unclaimed property".

The state comptroller's office does keep a database filled with the names and addresses of unlocated beneficiaries. They often do attempt to locate the beneficiary to release the unclaimed funds to. It is possible, depending on the state you reside in, to look online or in the paper for any unclaimed death benefits. You may also be able to call the state comptroller or treasurer for more information.

If the life insurance company is not aware the person holding the policy has passed away, they are under no obligation to turn the money over to the state. The money may remain within the insurance agency while they continue to look for the beneficiary. It is actually a rare thing for money to be turned over to the state. Most insurance companies will have their own way of finding beneficiaries.