How to Collect on Lost Life Insurance Policies

A relative has just died. He had a life insurance policy with you listed as beneficiary. There's just one problem: life insurance policy is missing. You have no idea which insurance company wrote it.

If you find the missing life insurance policy in the future, you are still eligible to receive funeral?

Hope they paid their insurance bills

If you are a beneficiary and you find the missing life insurance policy shortly after the insured dies (within six months to one year, for example), claiming the funeral should be without problems.

First, determine if the insured had term or permanent life insurance. If the insured had a long-term policy you will receive funeral if he died before the end of policy term. If he died after the policy expiration date, you will get something.

If the insured had a permanent life policy, you will receive money if the death occurred while the policy was "in force" meaning all premium payments were made until the time of death. If the death was a while ago, you will receive the benefit with interest from the date of death.

If life insurance policy lapsed - that is insured stopped make premium payments before he died - is a chance you might get something. When a permanent life insurance lapses, most insurance companies switch its status from permanent insurance to one of two possibilities:

"Extended term" - The insurance company uses the cash value of the policy to buy a term life insurance for the same death benefit using the cash value of the policy. Death benefit will continue for the longest period the cash value will buy.

"Reduced paid up" - The insurance company will keep the policy in force permanently, but will reduce the death benefits.

Gerry Brogla, an actuary for State Farm, says in most cases at his company, the permanent policy continues as extended term if it lapses. At State Farm, extended, the default for most permanent policies.

If the policy lapses, and the extended term expires before the insured dies, the policy is worthless and life insurance beneficiary will get nothing. If the insured dies before the extended term period has elapsed, the receiver will receive the funeral. If the policy lapsed because the insured died (thus ending premium and causes insurance to be placed in extended-term status), the receiver will still collect the full death benefit, regardless of when the extension was up. Receiver must always provide the insurer with a death certificate to verify date of death.

There is no time limit during which a life insurance beneficiary must step forward to collect money, according to Jack Dolan, spokesman for the American Council of life insurers. "If a person pops up 30 years after [the insured's] death, it still does good at it," Dolan assures.

What happens if nobody ever reports the death?

If the insured dies and the insurance company did not learn of the death, the policy lapses. Insurers will take steps to find out why a policyholder stopped payments.

When an insurance company stops getting payments, sending letters to the insured informing him policy may lapse due to unpaid premiums. If the letters go unanswered, the company can initiate a search to find the insured. If it comes up empty, the company will then lapse the policy.

If a beneficiary to a policy never steps forward, it unfortunately means the insured paid money to a policy throughout his life and recipients never see a penny. That is why its wise to make sure beneficiaries are aware of any life insurance you have.

If you are lucky, the State may have your money

In some cases where a beneficiary fails to claim a death benefit for several years, is the money transferred to the state where the insurance policy was purchased under the escheat laws.

If a company knows an insured died and it can not find the person must rotate the full death benefit over to the State Comptroller department within three to five years of the insured's death. The money is transferred to the state where the insured bought the policy. Money is considered "unclaimed property" and will be merged with dormant bank accounts and charged rent deposits. Comptroller's department maintains a database containing a list of names and addresses of lost life insurance beneficiaries.

Many states will try to contact life insurance beneficiaries in an attempt to pay death benefits. In Texas, for example, the names and addresses of recipients are published each year in each county in the state. In New York, the website of the New York State Comptroller's office for unclaimed funds an online search to find any unclaimed death owe you. You can find out the procedures in your state by contacting the Office of the Comptroller or your state treasurer.

Remember your chances of finding the policy of the state are slim. The insurer has no duty to disclose the money over to the state if it is unaware the insured died. In most cases, the addressee, who contacts the insurer.

Also, the insurer only transfers money to the state three to five years after it can not find the beneficiary but knows insured died. If the state does not have funeral, it's likely the insurer is still looking for receiver or do not know the insured has died.

Unclaimed death is rarely transferred to the State. Dave Potter, a spokesman for Hartford Life, says less than 1 percent of his company's death benefits go unclaimed.

Part Chance, a life insurance claims manager at State Farm, says, "Turning over life policy benefits for a single state after the death of an insured is extremely rare. The State Farm to use their own search techniques as well as outside vendors to locate lost beneficiaries in case the death of one of our insured. By and large, these procedures have always located the beneficiary.

Tips to ensure your life insurance beneficiaries receive your death benefit:

1. Give your beneficiaries your policy information. It can be a difficult and awkward conversation, but an important one.

2. Keep all your financial records (especially your life insurance policies) in one place. Do not force your beneficiaries to search your house from top to bottom, when you die.

Tips to look for lost life insurance:

1. Go through canceled checks or contact your relative's bank for copies of old checks. Look for checks issued to insurance companies.

2. Ask those who may have knowledge of your relative's finances. Talk to the relative's lawyer, banker, or accountant. Also contact the relative insurance broker.

3. Contact your relative's past employers. They may know of possible group life insurance. The insured may have also purchased additional life insurance through work.

4. Check the mail for a year. Premium bills and policy status notices are usually sent annually.

5. Look at your tax returns for the past two years. Check the interest income from policies or expenses paid to life insurance companies.

6. Contact Medical Information Bureau. If your relative bought life insurance fairly recently, there may be a trace of the companies that he used. Medical Information Bureau (MIB) maintains a database that can show whether insurers requested your relative's medical information within the last seven years. Record searches can be requested through the MIB's Policy Locator Service and cost $ 75. MIB says that nearly 30 percent of queries emerging leads.