Unclaimed Life Insurance Becomes New Concern for the Government
With unclaimed money growing at an alarming rate, unclaimed life insurance has become a new source of influx into the state treasuries. The unclaimed life insurance money does not stay with the insurer indefinitely and is eventually transferred to state unclaimed property divisions. Most of the states are mandated by law to publish information on Web sites or in local newspapers.
A few insurance companies have their own websites that list unclaimed life insurance policy amounts. Once these unclaimed life insurance monies are in the dormant state for a long time, they are transferred to the escheat funds of the states to be utilized for the state welfare programs.
New York has received $400,287,736 in unclaimed life insurance property since 2000 and paid out $64,772,228, said Vanessa Lockel, a spokeswoman for the Office of the State Comptroller. And that is just one part of the $10.5 billion the state has received in unclaimed property since 1943. Only about 20 percent of the property is claimed in any year.
Florida has about 9.9 million unclaimed accounts, including securities and other property, in addition to insurance, worth more than $1 billion. Of that, some $355 million is related to unclaimed insurance, said Alexis Lambert, a spokeswoman for the Florida Department of Financial Services.
Experts in this field will vouch for the fact that most of those insurance policies will never be claimed and the money will end up being used by the states. New York has had an account from one person worth $1.7 million since 2004.
“Life insurers make every effort to locate beneficiaries of life insurance policies,” said Whit Cornman, a spokesman for the American Council of Life Insurers, a trade group. “Many companies have units dedicated to dealing with unclaimed proceeds.”
Every state has a different escheatment policy and timeframe for the insurance money to be considered unclaimed money. In most of the cases, insurance companies have two to seven years from the date a policy is deemed inactive to transfer the money to the state treasury.
Unclaimed life insurance policies must be reported in most states. Insurance companies must file unclaimed or “lapsed” policies to the state, including all funds. The state labels these funds as “unclaimed property” with the beneficiary as the owner.
