Life insurance is a good way to ensure that you can keep looking after your loved ones once you are gone, and to cover end-of-life expenses such as funeral and burial costs.
But life insurance does not pay out automatically, and life insurance companies don’t have mechanisms in place to always know when their clients pass. Therefore, it is up to the beneficiaries of the policy, or the deceased person’s executor or lawyer, to contact the insurance company.
For this reason, it is important to tell loved ones that you have a policy.
However, conversations about death can be difficult, and there may be a variety of reasons why someone might not have told their nearest and dearest about their policy. Or perhaps they have mentioned that they have a policy but not the details and the insurance company, and the paperwork is lost among the many things to be sorted through upon their death.
So, how do you find out if someone has life insurance and the details of their policy?
How To Search For Life Insurance Policies
There is no central database of life insurance policies; however, there is a database of all life insurance applications made for individual life insurance processed since 1996. This is called the MIB database, and it can be found here.
However, it is not a simple matter of just searching the database with someone’s name. You also need to provide details such as the state in which the policy is administered. There is a fee for every search, and statistics suggest that matches are found for only one in every four searches.
So, before you start looking here, there are a number of other things you should do to see if you can track down the policy, and also narrow down your MIB search if it becomes necessary.
Tips For Finding A Lost Life Insurance Policy
Search Their Documentation
If a deceased person has a life insurance policy, they should have documentation related to that policy. So the best thing you can do is find that documentation. This usually means going through the deceased’s essential paperwork or online documentation.
Speak To Their Lawyer Or Financial Advisor
If they weren’t very organized, the deceased may have registered copies of their documentation of information about the policy with their lawyer or financial advisor, so speak to those people.
Contact Their Previous Employer
If you suspect the decedent’s policy was actually taken out by their employer, speak to them as they will be required to have documentation of the policy.
They may also have a complementary low-cost policy if they were part of a member’s organization. Again, contact that organization as they are required to retain the documentation.
Check Their Bank Statements And Emails
If you still haven’t found anything, review their bank statements. If they have an active policy, they will have been paying into it on a regular basis, so look for consistent monthly payments to a company that provides insurance.
You can similarly check their emails, as they probably receive an annual update on their policy, though whether they kept those emails or not is another question.
How Likely Are They To Have A Policy?
If you have done all these things and still have not found any evidence that the deceased person has a life insurance policy, you need to ask yourself how likely it is the person actually has a policy.
Around 60% of Americans have a life insurance policy of some sort, so there is probably a 50-50 chance that they have a policy.
The kind of people most likely to have a policy include:
- Anyone with significant debt such as a mortgage (Life insurance is often required to get large loans to cover the outstanding amount in the event of the borrower’s death)
- Business owners, who will often have insurance to protect their business in the event of their death (You can read more about life insurance for business owners here.)
- Anyone who has dependents, such as children or a spouse, who rely on their income
- Anyone leaving behind a large estate, who might take out a policy to cover inheritance tax so there will be no need to sell off part of the estate to cover the tax
- Older people concerned with covering end-of-life expenses such as funeral and burial costs
While there are a variety of other reasons why someone might choose to have life insurance, if the person you are concerned about does not fit into one of these categories, and you cannot find any evidence of insurance among their personal documentation, there is a good chance they don’t have a policy.
Also, remember that it is very difficult for anyone to take out a policy on someone else, so the deceased person will almost certainly have taken the policy out themselves.
Family members are not generally permitted to take out a policy on loved ones, and the exception is usually businesses taking out policies on key employees. So, you should be able to track down these types of policies by speaking to the decedent’s former employer.
You can read more about life insurance and how it works here, to understand whether they are likely to have a policy.
Alternative Search Options
Some states do offer free search services for residents looking for lost policies. You can contact the National Association of Insurance Commissioners (NAIC) to see if there are officials in your state that might be able to help identify the policy. They will generally be able to provide you with a list of insurance companies that may have underwritten a policy on the deceased, which you can then contact directly.
If the insurance company that underwrote the policy does learn that the policyholder has passed, and they are unable to find the beneficiary, they are required to hand the benefit over to the state in which the policy was purchased. The state will then have a record of money held from unclaimed life insurance policies. You can contact them through the National Association of Unclaimed Property Administrators. This is generally only applicable for more distant relatives, or if you have been living overseas for a period of time and therefore the life insurance company was unable to locate you.
Collecting A Death Benefit
When you do locate the policy, to collect the death benefit you will need to contact the life insurance provider with a certified copy of the deceased person’s death certificate, their social security number, and valid identification for yourself as the beneficiary.
You will generally need to be a direct relative, executor, lawyer, or the beneficiary to discuss the life insurance policy with the insurance company, as the right to privacy does not expire upon death.
Small policies will normally pay out within a few days, but larger policies can take 30 to 60 days.
Frequently Ask Questions (FAQs)
What Happens To Unclaimed Death Benefits?
Insurance companies must hand over unclaimed death benefits to the state in which the policy was administered. The state will hold the money as unclaimed property, and the beneficiary can claim the property from the state in due course.
Can I Be The Beneficiary Of A Life Insurance Policy And Not Know?
Yes, you can be the beneficiary of a life insurance policy and not know about it, as your consent is not required to list you as a beneficiary.
Are Life Insurance Policies Public Record?
Life insurance policies are not public record, so there is no database of all policies. However, there is a database of all policy applications made since 1996. There is a fee to search this database.
How Long Does It Take For Life Insurance To Be Distributed?
While small policies are usually distributed within a few days of a claim, larger policies may take up to 60 days to pay out.
While it is always advisable to tell beneficiaries, or at least executors and lawyers, if you have a life insurance policy, there are a variety of reasons why a person may choose not to do this, or be unable to do this.
Life insurance policies do not pay out automatically, because insurance providers do not have systems in place that mean they are aware when one of their clients has passed. This means that the beneficiaries or the estate of the deceased need to contact the insurance provider, with a copy of the policy.
There are a variety of things you can do to find out if a person has a life insurance policy. But the best thing to do is to find their policy within their personal documentation before trying other types of searches, which are often expensive and not always successful.