Finding Forgotten Life Insurance Policies

When a family member or loved one dies there are many tasks carried out by the executor of the person’s estate, including:

• paying outstanding bills
• closing accounts
• gathering assets
• organizing paperwork
• disposing of personal effects
• filing for probate

It’s easy to see how an insurance policy or other unclaimed money could be lost or forgotten in the midst of the many important functions of an estate executor. In fact, the National Association of Unclaimed Property Administrators says some $3 billion is returned to individuals each year from “lost” accounts.

You may be the beneficiary of an unclaimed life insurance policy or another account. 

Type of Accounts

People open valuable accounts all the time – sometimes they’re required to by an employer – and then simply forget about them. Members of unions may have automatic accounts that an individual doesn’t pay attention to, or a person may be unaware they were awarded a sum in a class-action lawsuit. There are many potential reasons for unclaimed money, such as:

• retirement benefits
• rebates
• overpayment on an account
• union dues
• forgotten bank accounts
• employer-created savings or retirement accounts
• uncollected wages
• inheritances
• escrow accounts

Most accounts require a named beneficiary but that person may be difficult to track down decades later due to name changes or relocation. In addition, things like savings bonds left in bank safe deposit boxes must be traced through the person who opened the account, a task that is complicated if that person is deceased, as it then can be done through probate court – or the bonds simply added to the state’s unclaimed money list.

The bank, insurance company, employer, or custodian of accounts has a state-mandated period of time to contact the rightful owner of the asset (cash or account), usually three to five years. After this period the funds are liquidated and held indefinitely by the state until the owner or an heir steps forward. The process for claiming funds can be quick and simple if you are the primary owner but becomes more challenging for heirs who must complete significant paperwork, including filing sworn statements from other co-equal heirs who may opt-out of the process.

State comptroller’s offices are responsible for auditing financial companies to ensure that funds are returned to their owners. The process in which unclaimed funds are moved to state possession is called escheatment.

If You are an Executor

When a person makes a will that document (if legally executed) spells out the dispersal of the individual’s funds and personal belongings. The executor is required to carry out those wishes with oversight from the county probate court. The process takes months to complete, and the remaining funds are then distributed to heirs according to the deceased’s wishes.

During this process an executor may believe they have accurately accounted for everything – yet still miss an old, forgotten account. It takes significant diligence to research financial records and former employment records in every state where the deceased lived, owned property, or did business to ensure that every potential account has been settled. It’s possible for something like a short-term life insurance policy to sit forgotten for years.

Executors should:
    • examine current and past bills for evidence of a life insurance policy;
    • make a formal inquiry at all banks that the deceased used, looking specifically for safe deposit boxes and accounts that have been untouched for years
    • inquire with all past employers
    • watch incoming mail and email for messages about accounts, and
    • do the same diligent search in each of the places that the deceased lived or did business.

Consider that a person working for a town library may be required, at age 18, to open an employee savings account. If that person holds the library job for four years then move on, their name could change, their home address is likely to change, and the town administration that oversees the library is likely to change as well. Each of these changes puts the account one further step removed from the individual’s reach, yet it may continue to accrue interest indefinitely, resulting in a big payoff for the person who finds and identifies the account.

How to Find Unclaimed Money

It is possible, if one is the executor of an estate, to seek information at one of the national credit reporting bureaus to identify any credit cards, investment accounts, or bank accounts open in the deceased’s name. This process requires submitting the death certificate, which is only available to specific individuals with proof of identity and purpose.

Each state and the federal government has a process for individuals to research unclaimed money. In general, it requires going to the state website and registering with one’s Social Security Number.

Connecticut’s statistics on unclaimed money show that over $120 million was shared by over 575,000 heirs in a recent year, making the average payout between $100 and $500. On the same list, 52 individuals were sought to take possession of $14 million. One lucky person walked away with a $32 million jackpot of inherited – and forgotten – stocks. 

If your name or the name of a deceased relative is on a state list of unclaimed money you won’t be able to find out how much is in the account until the paperwork has been filed. The national average payout is under $500.