The largest non-government holder of unclaimed money is life insurance companies. Nearly 30% of all life insurance benefits over $500,000,000 are unpaid or unclaimed at the policyholder’s death. Family members do not notify the insurance company simply because they do not know that the deceased person may have had more than one policy. As a result, life insurance companies become separated from their policyholders and beneficiaries, usually because they have not been notified of the name or address change.
Also, many states do not presume abandonment of life insurance policies until the policyholder has reached the age of over 100 years. As a result, these types of unclaimed assets may not show up in a government database for some time.
It is the beneficiary’s responsibility to contact the life insurance company and there is no central database to search. Also, regardless of the type of policy, whole life or term, there could be a residual value even if the policy was canceled or unpaid.
Another source of unclaimed money or assets with life insurance companies has been the recent demutualization of some of the larger insurance companies. Demutualization refers to a reorganization in which a mutual becomes a public limited company. This is achieved through the payment of shares or cash to policyholders at the time of discontinuation of the mutual company. This reorganization has no impact on the actual life insurance policy.
After demutualization, the shareholders of the new company give them the right to vote at shareholders’ meetings and to have dividends declared on their shares. The new shares are listed on a major stock exchange. This provides the ability to raise capital by getting new investors to buy the shares while providing a market for policyholders to sell their shares.
The amount owed to each insured is based on a number of factors, including how long the policy has been in force, the face value of your policy, and the total premiums paid. For many policyholders, this windfall from demutualization can be substantial, and the financial benefits continue after the company demutualizes.
Between 1985 and 2004, more than 20 large insurance companies demutualized. View List: Unfortunately, these major insurance companies did not know the current addresses of millions of policyholders, and policyholders were not told that they now owned stock in a new company in addition to their real life insurance policy.
If you or a deceased relative had a life insurance policy with any of the following companies, you may be entitled to stock and cash dividends, as well as proceeds from the policy itself. If the policyholder cannot be found, the demutualization proceeds are turned over to a state agency after the statutory period that varies from state to state (but typically one to three years) has elapsed. There is no time limit in which this income can be recovered, however, it is possible that the government agency will sell the shares and any appreciation or dividends will be lost after the time of sale.
If you believe a deceased relative had a policy and no payment was received or had a policy with a life insurance company that demutualized, start an unclaimed asset search and contact the life insurance company directly.
