Every year, tens of millions of dollars in life insurance benefits go unclaimed, leaving families and loved ones without the financial protection they’re entitled to. The Model Unclaimed Life Insurance Benefits Act, also known as the National Council of Insurance Legislators (NCOIL) Model Act, standardizes the process for handling unclaimed life insurance policies to help reduce the number of outstanding claims.
What is the Model Unclaimed Life Insurance Benefits Act?
Originally adopted in 2011 by the National Council of Insurance Legislators (NCOIL), the Model Unclaimed Life Insurance Benefits Act helps tens of millions of dollars of unclaimed life insurance money get into the hands of the intended beneficiaries in a timely manner.
The model act requires insurers to periodically search the Death Master File (DMF), the Social Security Administration’s (SSA) database for determining that a person has died. These required checks help insurers to identify deceased policyholders, find policies with unclaimed life insurance benefits, and pay out the funds to the policy’s beneficiaries within 90 days if there’s a match.
Many — but not all —states have adopted their own versions of the NCOIL Model Act since its inception in 2011. And most major life insurance companies, even in states that haven’t enacted this model legislation, follow the act’s recommendations. You can check your state to see whether your policy — or that of someone whose beneficiary you might be — is covered under legislation based on this act.
What happens to unclaimed life insurance money?
It’s rare, but sometimes when someone with a life insurance policy dies, their beneficiaries don’t know about an existing policy. Other times beneficiaries may forget to file a claim for benefits in the midst of grieving.
After a certain number of years (usually three, but each state has its own regulations), the unclaimed benefit money is turned over to the state in which the policyowner last lived. This transfer of property to the state is known as "escheat."
How does an escheat work?
After an unclaimed benefit is transferred to the state, the state must make a last-ditch effort to find the beneficiary before the money is officially turned over to the state treasurer.
Most people (unless you’re Jeanne Louise Clement) don’t live to 120. But if your beneficiaries never claimed benefits, life insurance companies assume the policyholder is dead on what would be their 120th birthday and disperse the death benefit to any living beneficiaries. This is known as the “limiting age” in your policy.
To ensure that beneficiaries get the life insurance payouts they were owed within a more reasonable time period, the National Council of Insurance Legislators created the Model Unclaimed Life Insurance Benefits Act.
This act and other laws have forced insurers to turn over unclaimed benefits to the state in which the policyholder lived after a certain period of time. By placing the death benefit money in the states (and out of the hands of the insurance companies), beneficiaries can more easily check state databases for unclaimed benefits. Almost the entire industry has now agreed to these rules.
How do you find out if you have unclaimed insurance benefits?
The National Association of Insurance Commissioners (NAIC) and some state insurance departments have created tools to help consumers search for lost life insurance policies.
The unclaimed life insurance databases
A state’s Department of Insurance: Some states let you search for a policy through their DOI site. They also list department contact information if you want to talk to someone directly.
Life Insurance Policy Locator Service: Created by NAIC, this lookup tool asks for information such as your address, relationship to the deceased, and the deceased’s Social Security number, then asks their partner insurers to search their records for matching policies.
MissingMoney.com: This site, endorsed by the National Association of Unclaimed Property Administrators (NAUPA), aggregates state records of unclaimed funds.
It may take up to 90 business days to hear from an insurer if a policy is found. The insurance company will contact you directly if you’re an authorized beneficiary or are otherwise allowed to get information about the missing policy.
When you don’t know if a policy exists:
If you aren’t sure if there was a policy to begin with, there are a number of ways to find out. The NAIC Life Insurance Policy Locator Service (mentioned above) can be used to check tax records and financial statements.
The MissingMoney.com tool endorsed by the National Association of Unclaimed Property Administrators is another useful resource when you aren’t sure where to begin.
When you know a policy exists:
There are a few ways to find a lost life insurance policy, including:
Contacting the life insurance company
Using one of the unclaimed life insurance database options mentioned above
Contacting the deceased’s financial advisors
Searching for the physical copy of the policy
Searching digital storage
Unclaimed Life Insurance Benefits Act FAQs
How do I find unclaimed life insurance benefits?
Your state’s Department of Insurance (DOI) website, the National Association of Insurance Commissioners (NAIC)’s Life Insurance Policy Locator Service, and MissingMoney.com are some of the resources available to determine if you’re the beneficiary of an unclaimed life insurance policy.
What happens if a life insurance policy goes unclaimed?
Each state has its own regulations, but typically after three years, unclaimed life insurance benefit money is transferred from the insurance company to the policyholder’s last known state of residence.
How long does a beneficiary have to claim a life insurance policy?
There’s no set time limit on claiming life insurance benefits. However, if more than three years have passed since the policyholder died, you may have to go through the state treasury to claim the money.
