Few people would stroll past a $100 bill on the sidewalk without stopping to pick it up. But that’s exactly what many Americans do by failing to check for unclaimed property.
During my days in the California State Treasurer’s Office, I saw the huge sums — from stocks and bonds to jewelry and final paychecks — that went unclaimed each year. Today, literally billions of dollars is in search of its rightful owner.
But did you know that that could include life insurance policies? About 25% of policies go unclaimed after someone dies, says Jessica Bloomgarden, CEO of AfterSteps, an online end-of-life planning and organization site — and that’s almost always the direct result of beneficiaries not being aware that an insurance policy exists.
Unclaimed insurance policies have generated headlines lately. One example: Florida’s $438 million settlement earlier this year with MetLife, when it discovered that some 15,000 families may be owed $9 million in benefits that were never paid. So how can you avoid missing out on an insurance payout?
The most important step you can take is to make sure beneficiaries know about any insurance policies before something happens. Bloomgarden suggests providing a copy of the policy to the beneficiary or, at the very least, giving them the policy number. Keep that information with other important documents in a single location, such as a file or safe. Just knowing a policy exists with, say, John Hancock, MetLife, Prudential or any other insurer, can make a huge difference in ensuring the funds are claimed.
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Another problem is that some 65% of adults still lack a will. A will ensures that other valuable assets are passed on according to one’s wishes. Provide a copy of the will to your executor, or be sure the executor knows where it’s located.
Rather than rely on a safe, one alternative is to use online virtual filing cabinets, such as AfterSteps, to secure important documents. In addition to providing planning advice and alerts to update beneficiaries, these services allow you to upload a copy of the policy or simply enter pertinent information that can then be accessed
by the designated executor, attorney, or other appointed person. These services start at $5 a month and provide a single place to store one’s insurance policies, investments, end-of-life wishes and passwords to digital accounts such as Facebook and LinkedIn.
Ensuring the right person is insured
John Breyault, vice president of public policy at the National Consumers League, also encourages consumers to make sure that the information the insurance industry has about them is correct.
The so-called Medical Information Bureau (MIB) Report allows policy holders to do this for free. If a consumer has applied for an individually underwritten life or health-insurance policy within the last seven years, they can request one free MIB report per year. “This is in many ways a safety check like checking your credit report — to ensure that no one has taken out an insurance policy in your name,” he says.
Executors and administrators of an estate might consider the MIB’s fee-based “Policy Locator” service. For $75, this service checks to see if a deceased person has a life insurance policy in their name. If no executor has been appointed a surviving spouse or closest surviving relative can request the report.
Finding unclaimed life insurance
If you suspect you might be entitled to a life insurance payment, you can either check with the insurance carrier, assuming you know who that is, or contact your state’s unclaimed property division. (To check, go to the National Association of Unclaimed Property Administrators at www.unclaimed.org). Depending on our state, you may need a death certificate or the person’s social security number and date of birth.
Many states have searchable online databases. If not, just call the state treasurer’s office. If the unclaimed property is not in your name, you’ll need to prove you’re the legal guardian or representative. Remember, the state doesn’t own the property but it does need to be sure it’s being returned to its rightful owner.
Bottom line: be sure you take the steps now to ensure that the investment you make in insurance is passed on to your loved ones.
Jennifer Openshaw is author of “The Millionaire Zone” (Hyperion) and president of Finect.com, a soon-to-launch networking platform for the investment community. Reach her at email@example.com or on Twitter @jopenshaw
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