What happens to insurance payouts that are not claimed by beneficiaries depends on what type of policy was issued, and whether or not it was paid-up and in force at the time of death.

Term life insurance covers a designated number of years, while whole life policies span a lifetime. It's important to note polices can be in force even if the payment of premiums has stopped, or if money has been borrowed against the policy. Even cancelled polices can have some residual value based upon what type of non-forfeiture option is selected at the time of purchase.  

If a whole life policy was in force - either because it was fully paid or because premiums were current until death - beneficiaries receive the full policy value. There is no time limit on claiming a payout when the insured dies with a policy in force. If a claim is not made until some years after death, accrued interest is added.

But if benefits remain unclaimed until such time as the insured would have reached the limiting age on the mortality table, generally 100-115 years, the benefit may be considered legally abandoned. It then comes under the purview of state unclaimed property and escheat statutes, but in most cases heirs retain the right to reclaim the funds.

If the policy lapsed - if the insured ceased making payments some time before death, beneficiaries may receive either a reduced benefit or nothing at all, depending on the length of time since death. This is because underwriters often convert permanent policies to extended term policies (using the cash value at the time payments stop), or to reduced benefit paid-up permanent policies.  ...  MORE

► Life Insurance Legal Settlement:  Heirs of deceased policyholders may be entitled to receive restitution arising from a 2008 audit of major life insurance companies that revealed insurers failed to pay death benefits to beneficiaries even in cases where they knew, or should have known, the policy holder was deceased. It was also found that in many cases underwriters continued collecting policy premiums by deducting payments from the cash value of the policies, until all equity was depleted.

Insurance companies participating in the settlement include: AIG, Aviva, Forethought, Genworth, Hartford, ING, John Hancock, Lincoln National, MetLife, Midland National, Nationwide, New York Life, Northwestern Mutual, Pacific Life, Prudential, Symetra, TIAA-CREF, Transamerica and Western & Southern. These companies write more than 50% of all the issued and active life insurance policies nationwide.

To determine if you are entitled to receive payment go to: Life Insurance Settlement Claims

► How to Find a Missing Policy  The first and most basic step is to check the deceased papers, including address and telephone books, to look for policy documents and/or the names of insurance agents. It's helpful to go through the deceased's mail for a year or more after death, looking for premium notices which are typically sent annually. If a policy is paid in full there may not be any notice of premiums due, but a statement or dividend payment may have been sent.

Search all financial records, including bank statements and canceled checks, to determine if payments were made to an insurance company, then follow up to see if the policy was redeemed or is still in force. Review the deceased's income tax returns. Look for any interest income that might have been received from a life insurance company, and check for interest expense, in the event a loan against the policy was made.  

If you are certain a policy existed but have had no luck with any of the above, you should contact underwriters directly. While there are some 2500 underwriters of life insurance, but experts estimate 90% of all polices are written by the 100 largest companies. It may be possible to narrow this number down further by checking with your state insurance commissioner to see if a particular company is licensed to do business in your state ...  ...  MORE

► Life Insurance Demutualization Compensation  Demutualization is the process of converting a mutual life insurance company is owned by policyholders into a publicly traded stock company owned by shareholders, pursuant to a plan of conversion approved by policyholders and government regulators.

Many of the nation's largest life insurers have demutualized, including Prudential, John Hancock, Metropolitan Life (MetLife), Equitable, Principal, Nationwide, Mutual of New York (MONY) and others.

Policyholders, beneficiaries and heirs continue to be entitled to receive policy benefits due, but in addition receive stock and cash in exchange for their ownership interest. The windfall arising from demutualization can be substantial - often tens of thousands of dollars - but millions of missing policyholders and heirs have not made claims ... MORE

► Military Veterans Life Insurance  Servicemembers' Group Life Insurance (SGLI) is group life insurance for service members on active duty, ready reservists, commissioned members of the National Oceanic and Atmospheric Administration (NOAA) and the Public Health Service, cadets and midshipmen of the service academies, and members of the Reserve Officer Training Corps (ROTC). Veterans' Group Life Insurance (VGLI) is a program of post-separation insurance which provides for the conversion of SGLI to 5-year renewable term insurance. Members with full-time SGLI coverage are eligible for VGLI upon release from service.

Because they are obligations of the United States federal government, unclaimed veteran benefits come under a different set of rules compared to other insurance payments ...  MORE

► Find out what happened to a life insurance company no longer in business  Family members should not assume that because a life insurance company is no longer in business that policy benefits are gone forever. Over the years hundreds of life insurance companies have changed name or merged with others, and policies are still valid. To find out what happened to a company that no longer exists go to: Life Insurance Company Trace

► Industrial Life & Burial Insurance:   Decades ago, large underwriters including Prudential, Metropolitan Life, and John Hancock pioneered "Industrial Life" policies, also known as burial insurance. Aggressive marketing to the elderly poor made it a popular product. In Florida alone, nearly one million policyholders are entitled to collect benefits totaling three-quarters of a billion dollars.

These types of policies have a major flaw: they often don't contain a pay-off date. Policyholders pay indefinitely for a small, fixed benefit, typically $1-2,000. A National Association of Insurance Commissioners (NAIC) investigation found as many as half of all policyholders had made payments exceeding the value of benefits to be received ...  MORE

► Policies at Failed Life Insurance Companies   Although there's no federal program in place that protects consumers from insurance company failures, each state has a Life and Health Insurance Guaranty Association (GA) that backs up insurance company policies in the event of the underwriter's bankruptcy. Guaranty Associations are funded by assessments on insurance companies licensed to do business in a particular state.

The amount of insurance protection provided by a Guaranty Association varies by state and type of insurance. Most commonly beneficiaries are entitled to $300,000 in life insurance death benefits and $100,000 in cash surrender value for life insurance ...  MORE

► Holocaust Survivors & Heirs   For those who believe they may be entitled to claim Holocaust-era (January 1, 1933 and May 9, 1945) insurance policies, but records were lost or destroyed, the New York State Banking Department has established the Holocaust Claims Processing Office to provide assistance. ...  MORE

► MetLife is now Brighthouse Financial In March 2017, MetLife USA life insurance policies and annuity contracts were transferred to Brighthouse Financial. MetLife shareholders became eligible to receive a distribution of one share of Brighthouse Financial (BHF) for every 11 shares owned as of the record date. To determine if you are entitled to receive payment go to: MetLife - Brighthouse Stock Search