The Unclaimed Life Insurance Benefits Act: What you should know

What happens if life insurance money goes unclaimed? If you’re the rightful beneficiary, the Unclaimed Life Insurance Benefits Act helps you find unclaimed life insurance money.

Tens of millions of dollars in life insurance funds go unclaimed every year, leaving families and loved ones without the financial protection they’re entitled to. The Unclaimed Life Insurance Benefits Act, also known as the NCOIL Model Act, standardizes the process for unclaimed life insurance policies to help reduce the number of outstanding claims.

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 identify deceased policyholders and their beneficiaries.

Numerous states have adopted their own versions of the NCOIL Model Act since its inception in 2011, but all states must search the DMF at least semi-annually and notify the beneficiaries within 90 days if there’s a match.

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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. Or sometimes, 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 different 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 Unclaimed Life Insurance Benefits Act. 

This act and other laws have forced insurers to turn over unclaimed benefits to the state 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.

What is the Unclaimed Life Insurance Benefits Act?

Originally adopted in 2011 and readopted in 2019 by the National Council of Insurance Legislators (NCOIL), the Unclaimed Life Insurance Benefits Act is the solution to help tens of millions of dollars of unclaimed life insurance money get into the hands of the intended beneficiaries in a timely manner. 

By requiring life insurance companies to compare their claims records against the Social Security Administration's Death Master File on a semi-annual basis, they can identify policies with unclaimed life insurance benefits and pay out the funds to the policy's beneficiaries. 

This act has not been signed by every state, although most major life insurance companies still follow the act’s recommendations. You can check your state’s legislation to determine whether or not this applies to you, regardless of where you live or where the policyholder lived before they died. 

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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

  • 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 like 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: A site endorsed by the National Association of Unclaimed Property Administrators (NAUPA) that aggregates state records of unclaimed funds.

  • NAUPA: The National Association of Unclaimed Property Administrators (NAUPA)’s own search tool allows you to search for unclaimed money by state.

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 National Association of Unclaimed Property Administrators is another useful tool 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:

  • Contact the life insurance company

  • Use one of the unclaimed life insurance database options mentioned above

  • Contact the deceased’s financial advisors

  • Search for the physical copy of the policy

  • Search digital storage

If you’re still having trouble locating a lost life insurance policy, reach out to a Policygenius agent for free for help. 

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, MissingMoney.com, and the National Association of Unclaimed Property Administrators (NAUPA)’s search tool 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.