Life Insurance Q&A

from Morgan Moran -- "It is pretty staggering to think that nearly half of all life insurance policies go unclaimed. The life insurance companies don't generally put in any effort to let the beneficiary know that they have proceeds for them. It is usually left up to the family to contact the insurance company and let them know. The insurance company would rather not here from anybody as they are not looking forward to paying claims."

"The law states that all unclaimed policy benefits, are to be placed in government trust accounts until the beneficiaries come forward. Amazingly, billions of dollars sit in these trust accounts every year and remain unclaimed. We encourage people with life policies to put them in a secure place with other important documents and let those close to you know where to find them. If you took the time and spent the money to establish benefits for your family, it would be a shame that they didn't receive them. We suggest to our clients that they establish a secondary beneficiary, in case something happens to the primary."

"If you have questions or think you may be entitled to benefits, please call the insurance company right away. If you don't know what company the insurance was established through, inquire with the government about information on the unclaimed funds trust account."

Question: "How do you find unclaimed life insurance?"

Answer: "Under US unclaimed property law, financial assets are considered dormant, unclaimed and abandoned when contact with an owner is lost over an extended period. This often happens after death of the owner, or due to a name change after marriage or divorce, an unreported change of address or expired postal forwarding order, and incomplete or illegible records.

When rightful heirs fail to claim a forgotten life insurance asset over a specified number of years known as the dormancy period, those left holding the abandoned funds: banks, stock brokers, utilities, employers, and others - transfer custody to a government unclaimed property trust account in a process known as escheat. Here it awaits your claim.

New York currently holds $8 billion in unclaimed money, while California unclaimed property totals over $5 billion. Last year alone, states collected $22.8 billion worth of missing money, of which less than $1 billion was claimed. The US federal government holds even more, including $15 billion in unredeemed savings bonds, and hundreds of billions of unclaimed dollars in IRS refunds and Social Security checks that went undelivered or weren't cashed. It's important to emphasize millions of family members are unaware they’re entitled to collect missing money owed deceased relatives, who passed on without leaving an updated will or complete financial records. Life insurance policy benefits often go unclaimed, for example, because it's up to heirs to notify the insurance company when a policyholder dies, and virtually no effort is made to find lost beneficiaries.

"There is no government-wide, centralized information service or database from which information on unclaimed government assets may be obtained. Each individual Federal agency maintains its own records and would need to research and release that data on a case-by-case basis. The only unclaimed asset information that would be in the possession of the Department of the Treasury would pertain to outstanding Federal government check issue records." - United States Treasury Department

Each State handles the reporting and collection of unclaimed property and each state has its own laws and recovery methods for unclaimed property.

Money that belongs to you might be sitting in a state unclaimed property office, just waiting for you to claim it. Unclaimed property offices and state escheators currently hold several billion dollars of "lost money" belonging to millions of people. This web page (www.unclaimedproperty.info) will tell you how you can find out - for free - whether there is unclaimed property belonging to you, and how to claim that property.

How Property Becomes Lost

Most unclaimed property becomes abandoned as a result of a change of address (the owner moved), a name change (the owner got married or divorced), or death of the owner (the estate was unaware of the money or the heirs could not be located). Sometimes the owner knows about the asset, but is unaware that it has been decleared abandoned and turned over to the state. For example, here are a few of the most common scenarios in which you could "misplace" your money and not even know about it:

You moved and forgot to claim your security deposit.

The utility company owed you a refund check or a refund of your deposit, and you forgot to inform them of your new address.

The dividend checks from your stock or mutual fund have been going to the wrong address.

You moved your money to a new bank, but forgot about an account or safe deposit box you left with the old bank. Or maybe you left a little money in the checking account to be safe, and forgot about it.

You have a certificate of deposit with a bank that has seen no activity for five years. If you let it roll over and ignore the bank's mail, it could be declared abandoned.

A long lost relative died without a will, and its taken years for the courts to settle the estate.

A relative died and the insurance company took a while to send the check for the proceeds of the life insurance policy. Or the life insurance company may have undergone demutualization and was unable to find a current address for the policyholder.

You simply forgot about some money owed you. To prevent your property from getting lost, you should keep an up-to-date list of all your family's assets, including bank accounts, certificates of deposit, mortgage escrow accounts, retirement accounts (IRA, Keogh, and 401(k)), layaways, stocks, bonds, mutual funds, life insurance policies, security deposits, and safe deposit boxes. If you change your name or address, write to the address associated with each asset to notify them of the change. Likewise, if you regularly receive insurance benefits or dividends, and the checks stop coming, promptly notify the company of the problem.

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