What do you want to know
- Beneficiaries of life insurance policies must claim the benefits.
- You must help customers follow applicable policies.
- You should also encourage clients to communicate well with the beneficiaries of their policy.
Let’s face it: no one wants to think about dying.
But everyone wants to keep their loved ones safe, which makes life insurance a popular recommendation from financial advisors and insurance agents to complement a client’s financial planning portfolio.
In fact, the Insurance Information Institute indicates that in 2020, 54% of all people in the United States were covered by some type of life insurance.
With life insurers paying out billions in benefits and claims each year, a significant portion of those funds go unclaimed.
So what happens when these claims are not collected, the insurer cannot locate the beneficiary, or the insurer never receives notice of the policyholder’s death? In each of these cases, the law of unclaimed property applies to life insurance benefits and, if a life insurance policy or benefits are unclaimed, they could be subject to escheat for the benefit of the States.
What is unclaimed property?
Unclaimed property means any financial asset that has been abandoned, lost or unclaimed by the rightful owner for a predetermined period of time.
Each state has laws that require holders of these unclaimed assets to make efforts to reunite with the rightful owner.
If the owner cannot be found, state law requires that the value of the property be reported and paid to the state of the rightful owner’s last known address.
Life insurers are not permitted to retain unclaimed life insurance policies or benefits indefinitely.