How life insurance payouts go missing -- and how to find them

Jill Overmyer

Every year, millions of dollars worth of life insurance policies go unclaimed after the death of policyholders, leaving beneficiaries without the benefits to which they're entitled. Why does this happen? And how can you hunt down the benefits that are rightly yours?

How life insurance is lost

There are a variety of reasons life insurance benefits remain unclaimed. Often, the problem is simply a lapse in communication, according to the Insurance Information Institute. Here are some common scenarios -- and ways that policyholders can help prevent them:

  • The insurance company and the policyholder have lost contact with each other. This can happen if policyholders move without informing their insurance providers. Simply letting your insurance company know your new address will prevent it from losing track of you -- and your beneficiaries.
  • The insurance company may be unaware of the policyholder's death. Because insurance providers have no means of knowing when policyholders die until they are directly informed, give your beneficiaries the contact information for your insurance provider, and tell them what type of life insurance policy you have. That way, they can get in touch your insurer after your death and collect their benefits.
  • The insurance company may not be able to find the beneficiaries. It's important to provide your insurance provider with detailed, up-to-date contact information for those listed on your policy. Be sure to list the full names of all beneficiaries, their Social Security numbers and their current addresses.
  • The name of the insurance company may have changed, making it difficult for your beneficiaries to find it and make a claim. Be sure to keep track of any changes your insurance company goes through, like acquisitions, name changes or location changes. Make this information available to your beneficiaries.

Locating lost life insurance money

If a member of your family has died and you cannot immediately find the life insurance policy, you may have to do some sleuthing to track it down. Here are some tips from the Insurance Information Institute.

  • Look through financial documents that may contain insurance documentation or information. These often can be found in safes, in bank safe deposit boxes or in the deceased's personal files.
  • Ask the deceased's financial advisers or insurance agent for help. They may be able to provide valuable information. For example, the agent who sold the deceased a home or auto insurance policy also may have sold her a life insurance policy.
  • Up to one year after the death, keep an eye on the mail for letters from the deceased's insurance provider.
  • Look through checkbooks. Are there any checks made out to life insurance companies?
  • Contact the state's office of unclaimed property. If an insurer knows a policyholder has died but can't find the beneficiaries, this is likely where the money will end up.

If none of these methods turn up any useful information, you may want to broaden your search and contact all life insurance providers in the deceased's state. The National Unclaimed Property Network keeps a list of insurance companies, along with their most recently known contact information.