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Did Your Deceased Loved One Have Life Insurance?

According to some statistics, about a billion dollars worth of life insurance on deceased individuals is sitting around waiting for someone to claim it. If you lost a family member and think they may have had life insurance on which you might be the beneficiary, you can claim the benefit regardless of how long it has been waiting for you. It doesn't expire. It also doesn't grow or gain any additional interest once the original owner has died, but it still may be worth locating.

The first and most painful thing to do—but it's absolutely necessary—when a person has died is to go through their personal effects. This may seem obvious, but if a person was still paying insurance premiums, the quickest way to find out where the money was going is to simply check the bank statements for the current and past year. Just checking the last month won't be sufficient as some people pay their premiums quarterly or even annually. If the money was automatically drafted, the name of the business will be on a statement. If they were writing monthly checks, you may need to look through copies of cancelled checks for the previous and past year.

Another possibility is that your loved one may have had a "paid-up" policy, meaning that they have not paid anything into it for years as it was paid-up by the time they were 50 or 60 years old. Paid-up options are no longer common, but many seniors had small policies that required premiums of just a dollar or two per week while they were working. Those policies may have long been paid up, and they may have forgotten that they even had them. Most people kept the actual policies in drawers, boxes, safes, or even at their banks in safe deposit boxes. Some gave them to relatives who may have died themselves without ever telling anyone they had the documents. Consequently, it's important to make sure that no one comes through a deceased person's house and just tosses boxes of papers that look like accumulations of junk mail. Besides, life insurance is just one possible source of cash due to a beneficiary. Other possibilities are dividends on co-op memberships, old savings bonds, stock certificates, and more.

If you can't locate any documentation, but think your loved one had insurance, there are a few other places to look. Many people prefer to have as much business as possible with one company because of discounts or simply the comfort of familiarity. It should be easy to find out what auto insurance or home owner's insurance the deceased had. Often individuals have taken life insurance or accident coverage with the same companies, or have at least obtained advice on whom to buy from.  Another resource is the individual's tax preparer; while life insurance is not deductible, people often just take all of their expenses for the year to their CPA or accountant, so these professionals are in a good position to know where the money was going. Be sure to check with former employers. An individual who worked with a company for many years may have retired with a small life insurance benefit even though the original group coverage will no longer be active. Finally, if the individual had any military service, you may be able to find some records by contacting the local VA office.

Unclaimed insurance benefits eventually get turned over to the state of residence; thus the office of the Commissioner of Insurance for the given state will have some resources for helping you locate a policy.  As a last resort, you can contact MIB, as all policies written for all life insurance are cleared through MIB, and records are saved for 75 years. However, MIB only has a 28% success rate at locating old policies, and they charge for looking.  A better alternative—which will also take time is to write to:

American Council of Life Insurance Information Services
1850 K St. N.W.
Washington, DC 20006
(202) 624-2000.

Success is not guaranteed there either, but at least they will look for free. The Council will send a search request to most of the life insurance companies in the country and ask them to check their records for old policies. You simply have to complete a form with as much information as possible on the decedent.

Unfortunately, there is no easy way to find a lost life insurance policy if the deceased chose to keep the information secret, but there is a lesson to be learned. When it comes to life insurance, it is far better to work with a real live agent—and to communicate with him or her as a family than to purchase through either mail order or over the phone. Also, when you purchase life insurance, make sure at least one person, somewhere—even if all you do is put the policy information in a safe deposit box—will have access to the information. People all too often avoid talking to family members about what will happen when they die, but it is a discussion that can save time, money and heartache in the future. Don't let your family suffer needlessly when just a little communication could eliminate a problem.