What happens to unclaimed life insurance money?

A woman sits in front of her laptop with her hand on her chin wondering how to search for unclaimed death benefits

Your life insurance coverage exists to help provide financial peace of mind to your loved ones after your death. When a policyholder dies, their beneficiary files a death claim with the insurer. If the claim is found to be legitimate, the death benefit is paid out.

Sometimes, however, a rare and preventable problem occurs: no one claims the policy. Maybe no one ever told a life insurance beneficiary about these unclaimed benefits. In other cases, the listed beneficiary dies before the policyholder does without a contingent beneficiary listed. In some cases, beneficiaries may not even remember that the policy exists.

At other times, this unclaimed life insurance policy may be the result of incomplete beneficiary contact information. If the insurance company is unaware that the insured person has died, the benefit may also go unclaimed. Most insurance companies only find out about the policyholder’s death when the beneficiary initiates the claim.

It’s important to keep information up to date so that your beneficiaries don’t fall into this camp. Ensuring that your insurance company and your loved ones have the correct information, you’ll help prevent this very rare and frustrating issue.

How to Start a Life Insurance Policy Search

There are several ways to locate a life insurance policy. These range from a simple search of your or your loved ones’ homes and offices to contacting state agencies and financial professionals. Think you’re the beneficiary of a life insurance policy but can’t find the right information? Try the following:

  1. Look in filing cabinets, storage areas and in email inboxes. Not sure if your loved one had a life insurance policy? Checking common areas to look for billing notices or receipts for premium payments is often the first step. Bank statements or credit card bills are also a great place to seek this information. 

    Email inboxes are also a great place to look for payment confirmations.
  2. Check with state officials and agencies. The NAIC offers a robust Life Insurance Policy Locator System. This organization partners with participating insurers to look for life insurance policies in your loved one’s name.

    You can also search their state’s unclaimed property department. You can usually perform a life insurance policy search by name.
  3. Contact employers, financial professionals and accountants. Your loved one’s financial advisor likely has information related to insurance policies and other key documents. You may also want to reach out to their employer for group life insurance information (if applicable). The insurance agent responsible for their home or auto policies might have sold them life insurance coverage too.

What happens to life insurance proceeds with no listed beneficiary?

The first step in finding the correct beneficiary for a life insurance policy? The insurance company checks the record of deaths reported to the Social Security Administration. This record, known as the Death Master File, helps financial services companies and credit bureaus prevent identity fraud. Its other benefit is to help insurers uncover the potential for unpaid death benefits.

If the insurer is made aware of a policyholder’s death, they’ll make every effort to find a beneficiary. If found, insurers send claim forms. If they can’t find a beneficiary, they usually turn the unclaimed life insurance benefits over to the policyholder’s last updated state of residence.

If these proceeds are unclaimed after three years, they usually end up at the unclaimed property department. State treasurers’ offices will typically hold this money until someone files a claim and provides documentation showing ownership of the property.

Sometimes this documentation is as simple as a driver’s license and proof of address. At other times it can involve copies of the death certificate and documentation on their relation to the insured.

How to Claim Life Insurance After Death

If you do have the available information, contact your loved one’s insurance claims department and file a claim for death benefits. No matter what the process looks like, you’ll want to obtain several copies of the death certificate; you’ll be mailing these off to all invested parties. Methods of claiming these benefits differ by carrier. For example, some insurance companies may ask that you send a form and a copy of the death certificate. Others may send you a packet of forms with a request for information.

How long do you have to claim life insurance?

There is typically no time limit on claiming death benefits from a life insurance policy. But there’s no good reason to delay, either. It can usually take 30 days for the claims department to process your claim and send the money. 

There’s a good chance those funds can be put to good immediate use. It makes sense to file the claim as soon as you’re able.

Understand Your Life Insurance Policy with SelectQuote

One of the best gifts you can give your loved ones is financial security through a life insurance policy. Part of that is ensuring you know what happens to a life insurance policy with no beneficiary. Spare them from the headache of dealing with unclear steps after your passing. Ensure everything is lined up for your life insurance beneficiaries by performing a regular checkup on your policy as part of your estate planning.

Don’t have a life insurance policy? We can help! Our licensed insurance agents can help you find the right kind of life insurance coverage for your needs.

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