Unclaimed life insurance

A life insurance payment can be a real financial lifeline for bereaved families.

It can cover things like funeral costs or paying off a mortgage. Or it could simply go towards the everyday living costs of those left behind who relied on the income of the deceased person.

The proceeds from a policy can also be left as a legacy for loved ones to help them on their way in life, or onto the property ladder, for example.

Sadly, though, many life insurance policies are never claimed, meaning people don’t always get the payouts their loved ones intended them to benefit from in the event of their death.

In fact, our research estimates that over 2.9 million life insurance policies are in danger of going undiscovered and unclaimed.

So, if you have any reason to believe someone you’ve lost took out a life insurance policy, but you can’t locate the documents or there’s no mention of it in their will, then it’s still worth investigating.

What is an unclaimed life insurance policy?

When someone with life insurance dies within the term of their policy, their beneficiaries are entitled to a tax-free payout which is in the form of a lump sum or monthly/annual income.

Life insurance isn’t paid out automatically, though. The insurance company needs to be informed of the death of the policyholder, usually by a beneficiary of the policy.

Beneficiaries must then make their claim with the insurance provider in order to receive the policy funds.

This usually involves a simple phone call or online interaction where they’ll be asked to provide certain information such as details of the person who has died, plus the life insurance policy number.

However, there are instances when beneficiaries simply aren’t aware their relative or loved one took out a policy at all. That’s why so many life insurance policies go unclaimed.

In some cases, this could be because a policyholder may have forgotten to tell their loved ones they had a policy in place. Or perhaps they found it too difficult to talk about so never got around to it before they passed away.

In other cases, although a policyholder may have informed their family they took out life insurance, they neglected to tell them what company the policy was with, where and how to access the policy documents, and didn’t detail the policy in their will - or died intestate (without making a will).

Sometimes, policies go unclaimed because the beneficiaries die before the policyholder does.

What happens to unclaimed life policies?

Any unclaimed policies will remain available to be claimed indefinitely. There’s no deadline to make a claim. So, you could receive money many years after a loved one has passed.

Some life insurance companies have become more proactive in recent years. In certain cases where payments have stopped being made by a policyholder’s bank or an old policy remains unclaimed, they’ll search the death register for the policyholder’s name and then attempt to contact the policy beneficiaries. But this isn’t necessarily widespread practice and tracing a person may prove difficult or even impossible.

After seven or more years, if a customer and beneficiaries can’t be traced, many unclaimed policies go to the government's 'dormant assets scheme’, where the money is used to support charitable causes.

However, even after this, you can still make a claim with the life insurance provider for the money you’re entitled to. They’ll honour the policy indefinitely.

Why should you check for unclaimed life policies?

Our recent survey found that 18% of life insurance holders haven’t even told their family members that they have a policy. So if they die, their beneficiaries would have no idea there was money waiting to be claimed. ^[1]

And a whopping 71% of people surveyed stated that the policy isn’t detailed in their will, making it easy to see how so many life insurance policies go undiscovered and therefore unclaimed. ^[1]

How can I track down unclaimed life insurance?

If you think a relative might have taken out a life policy but are unable to find any documents and don’t know the name of the insurer, there are some things you can do.

• Look through the deceased’s bank and/or credit card statements for any regular payments made to an insurer. You can then contact the insurer, even if you don’t have a policy number, and ask them to help
• If you have a grant of probate, you could try calling up a range of different insurers to see if they’ve got a policy for the person in question - the Association of British Insurers (ABI) holds a list of insurers
• Ask the deceased’s financial adviser or accountant if they have any details of a life policy
• Alternatively, you can use an assets tracing service. They'll charge you a fee or a ‘success fee’ for the service, this could be a small percentage of the total value of the life insurance payout
• It could also be worth contacting the deceased person’s employer in case they provided a death in service policy that’s waiting to be claimed

How to prevent losing a life insurance policy

You’ll want to:

• Ensure you tell your beneficiaries about the policy and let them know where the relevant documents are kept. Our recent research found that 35% of people with a life insurance policy said that their family didn’t know how to access their policy documents ^[1]
• Because of the long-term nature of life insurance policies, it’s important that you remember to let your provider know of any address changes so you can maintain up-to-date contact
• It’s easy to lose policy documents over the years, so try to ensure you keep them safe
• Include full details of the policy, policy number and name of insurer in your will

What do I do if the insurance company the policy was with no longer exists?

If you have life insurance documents and find that the company that issued the policy no longer exists, it may have merged and changed its name.

You can find a full list of insurers, and up-to-date contact information for them, including acquisitions and mergers, on the ABI website.

If the policy was taken out with a friendly society or society mutual, you can check through a list of members on the Association of Financial Mutuals’ website. They also hold a register of societies that have closed as well as the new names of the societies or the organisations they have been transferred to.