Under the terms of U.S. unclaimed property law, unclaimed financial assets, including life insurance, are considered ‘abandoned’ when no contact can be made with the owner or beneficiary for a lengthy period of time. There are many reasons why this happens:
- A divorce or marriage, leading to a name change
- A house move where no forwarding address has been left
- Illegible or badly written records
- Transient lifestyles such as those in the military
- And, most common of all: The heir or beneficiary has died without the knowledge of the life insurer.
According to NAUPA (National Association of Unclaimed Property Administrators) state departments across America are sitting on $32.877 billion in unclaimed funds, including life insurance benefits. The New York department holds a staggering $9.9 billion worth of unclaimed assets, and the state of California $5.4 billion.
Life Insurance Policies One of the Biggest areas of Unclaimed Assets
Figures from demutualized Life Insurers show that after becoming public companies, they needed to find millions of policy holders and beneficiaries – totaling $4 billion in unclaimed assets. On demutualization, John Hancock found it did not have current addresses for 400,000 current policy holders; Prudential did not know the whereabouts of 1.2 million of its policyholders, and Met Life held $2.7 billion worth of unclaimed demutualized assets.
Government takes control of Unclaimed Life Policy Funds after 3-5 Years
When a life insurance company receives notification of the death of the policy holder the law states that any unclaimed assets from the demutualization have to be placed in a government trust, if, the listed beneficiaries cannot be found. If there has been no notification that a life insurance policy holder has died and the policy owners cannot be traced, then Life Insurers tend to hold onto life policies until the owner would have reached 100 years of age before handing funds over to the treasury.
Could You be Missing Out on a Payout from an Unclaimed Life Insurance Policy?
If you think you might be a beneficiary of an unclaimed life insurance policy it is worth investigating. It’s worth remembering that even if the Life Insurer holding your potential funds no longer exists there will still be the possibility of a payout of up to $300,000 because the funds should have been placed in a state insurance guaranty association.
Sources
- NAUPA
- MSN Money: Unclaimed Billions How Much Is Yours? Liz Pullman Weston
photo credit: swanksalot