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What Happens When a Life Insurance Policy Is Unclaimed or Unpaid?

When a policyholder passes away, insurance companies don’t always take it upon themselves to search for surviving beneficiaries. Although insurers have access to death records, they often don’t take notice of policyholder deaths and delay payouts as long as possible – until the beneficiary makes a claim. Unfortunately, not all beneficiaries are aware of their entitlement to a claim. In other scenarios, insurance companies can’t track down beneficiaries. This leads to unclaimed insurance money going to the state or getting stuck in limbo. Here’s what can happen in these situations:

  1. The Beneficiary Becomes Aware of the Unclaimed Policy

In some cases, the beneficiary discovers a loved one’s unclaimed life insurance policy lists him or her as a recipient. A family member may mention the policy, or a search for the policy may be fruitful. If this happens, the beneficiary should contact the insurance company and begin the process of claiming the benefits. An individual can search for unclaimed life insurance in a few different ways:

  • Check your loved one’s life insurance policy. If a relative recently passed away, check through his or her life insurance policy for your name listed as a beneficiary. Ask other relatives for these documents if you don’t have access to them.
  • Call the Arizona Department of Insurance. Contact the department and give them your name and other necessary information. The Department will direct you to life insurance companies relevant to your search.
  • Contact your loved one’s employer. It’s possible that your relative had a life insurance policy through his or her place of employment. Contact the employer to find out if a policy exists and if you’re listed as a beneficiary.

Individuals can also work with unclaimed property programs, financial advisors, and the relative’s banks to find out about unclaimed life insurance benefits. After the discovery of benefits, the insurer should work with the beneficiary to disperse funds.

  1. Funds Go to Arizona’s Unclaimed Property Office

If the beneficiary has no knowledge of the policy and the insurance company has no knowledge of the beneficiary, the funds will go to the state’s unclaimed property office. The funds will sit in this office until further action ensues. Billions of dollars in unpaid life insurance claims currently exist across hundreds of insurers around the country. In Arizona, the Unclaimed Property Office (UCP) oversees safekeeping life insurance policy funds until further notice. Some of these funds will never find their beneficiaries. In other cases, rightful owners may become aware of the unpaid benefits and act.

Use the “Search for Property” tool on the UCP’s website to see if your name shows up as a “property owner” with unclaimed funds or items. The tool will ask for your last name and other optional information. Then search for “missing money,” including that in unclaimed life insurance policies.

Potential property owners can file a claim with the Arizona UCP using the online claim form. You may need to supply additional information and evidence to support your claim to someone’s life insurance policy benefits. If the Department accepts your application, the insurance company will be in touch with you shortly to disperse the funds.