Beneficiaries Unclaimed Life Insurance Policies

The purpose of a life insurance policy is to provide a monetary compensation, known as death benefit, to the beneficiary of the policy, on the death of the insured person. The owner of the policy is usually the person who pays the premium on the policy and has the right to name the beneficiary. Life insurance policies can be term life insurance or permanent life insurance policies. Unlike permanent life insurance policies, term life insurance policies allow the beneficiary to claim the death benefit only if the insured person dies before the term of the policy expires. The beneficiary, who is entitled to receive compensation on the death of the insured person, is known as the primary beneficiary. In case the primary beneficiary dies before the insured person, the contingent beneficiary has the right to claim the death benefit. A single beneficiary is called a specific beneficiary. In case a group of people are named as beneficiaries, they are known as class beneficiaries. If the policy owner wants a minor to be the recipient of the life insurance benefit, a guardian who has the legal authority to receive the death benefit, should be specified in the will. Most life insurance policies give the policy owner the right to revoke the beneficiary named in the policy. In case of irrevocable beneficiaries, the beneficiaries' consent is needed in order to name a new beneficiary to the policy.

Unclaimed Life Insurance Policies

Generally, the policy owner is the insured person who names the beneficiary. In some instances, the policy owner may be the beneficiary who pays the premium and is entitled to the death benefit in case the insured person dies. In this situation, there is no question of an unclaimed death benefit since the policy owner and the beneficiary are one and the same. However, the death benefit of many life insurance policies are left unclaimed since the beneficiary is not the policy owner and is unaware of the existence of the policy. For instance, a wife may be the beneficiary of the life insurance policy while her husband, the policy owner, is the insured person. In case the husband dies before the wife, she is entitled to the death benefit. However, she may not claim the proceeds since she may be unaware of the existence of the policy. It is best if the death benefit is claimed within a year of the death of the insured person. The beneficiary will be entitled to the entire amount of the death benefit provided the policy owner paid the required premium. An insurance policy is said to have lapsed if the premium payments, that are due, are not received by the insurance company. This can happen because the policy owner died or stopped making premium payments. In case the policy lapses because of the death of the policy owner, the insurance company is expected to make good its obligation to pay the beneficiary regardless of when the beneficiary turns up to claim the death benefit. The beneficiary would be expected to submit the death certificate in order to claim the amount of death benefit. In case the insurance policy lapses and the beneficiary does not claim the death benefit, the following course of action may be adopted by the insurance company:

• The insurance company may try to find out why the policy lapsed and may send letters to the policy owner informing him of the situation.
• In case the policy is a permanent life insurance policy, the company may use the cash value (death benefit and accumulated value) of the policy and buy a term life policy thus extending the policy.
• The company may keep the policy active but reduce the death benefit of the policy.
• If the company is aware of the death of the insured person but is unable to contact the beneficiary, it may transfer the amount of death benefit to the state where the insurance policy was purchased and the beneficiary can then claim the policy from the state

The insured person pays the premium all his life hoping that the beneficiaries will receive the necessary compensation on his death. In order to ensure that the death benefit does not go unclaimed, the policy owner should inform the beneficiaries about the existence of the policy. The life insurance beneficiaries, for their part, should go through the correspondence, canceled checks made out to the insurance company and the tax returns of the deceased. There is a good chance that the life insurance policy is a group insurance policy provided by the employer. Hence, the ex-employer may be aware of the existence of the policy. There are online resources that can help people track the death benefit that is rightfully theirs.