Collecting Unclaimed Life Insurance
Surprisingly, hundreds of millions of dollars in life insurance goes unclaimed every year. This is usually because the beneficiaries do not realize the money is owed to them. If the life insurance company cannot locate the beneficiary, or they were not notified of their death, then the money will remained unclaimed.
The life insurers do try to get the money to the right place but it can take years. The money is eventually transferred to state unclaimed property divisions, and then the states advertise the information on the Internet and newspapers. During this long process the life insurance company and the states do profit from the unclaimed money, taking away from potential profits for the rightful owners.
According to the article "Tracking Down and Collecting Unclaimed Life Insurance" by Paul Sullivan of NYTimes.com, New York has received $400,287,736 in unclaimed life insurance since the year 2000. They have paid out $64,772,228. Vanessa Lockel, the spokeswoman for the Office of the State Comptroller, says this is just a portion of the $10.5 billion the state has received in unclaimed life insurance since the year 1943. In any given year, only about 20% of the property is claimed. New York has had one account since 2004 worth an astounding $1.7 million.
Most of these unclaimed life insurance policies will never reach the rightful owner, and the money will end up being used by the state. Whit Cornman, the spokesperson for the American Council of Life Insurers, a trade group, says that life insurance companies make every effort to contact beneficiaries of unclaimed policies. Many companies actually have full departments dedicated to this task, which is comforting to know. Once the property has been transferred to the states, it's always available to be claimed, but in the meantime is used for other state needs.