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What happens to unclaimed life insurance money?

Aug 28, 2020 3 Minute Read

Life insurance is there to provide a financial safety net for your family when it comes to financial planning, but sometimes, things don’t go as planned. Each year, a small percentage of life insurance benefits go unclaimed by families or other beneficiaries. 

That means your family could miss out on money intended for them, after you spent years paying for a policy to make sure they were protected. So, what happens to unclaimed life insurance money? Learn how money can go unclaimed – and how to avoid it.

How do life insurance benefits go unclaimed?

Even though you’re the one buying a life insurance policy, it’s not for you, it’s for your family or beneficiary. That means they need to know about it to be able to claim it after you die. If you don’t tell your heirs about the policy and how to access it after you’re gone, they could miss out on benefits and find themselves missing out on unclaimed life insurance benefits.

In some cases, people forget about life insurance policies altogether, which means that they lose unclaimed life insurance benefits. Term life policies expire after a certain time, but permanent policies last a lifetime. It’s possible to build up enough money in the policy that it can cover premiums for the rest of your life. Even if you forget about the policy, it’s still there.

So what happens to unclaimed life insurance money? If you die and your family doesn’t know about a policy, your life insurance company may try to contact them about the unclaimed money. It’s typically up to a beneficiary to make a life insurance claim, but life insurance companies regularly check records of the insured to see if the insured has died.

If they find that someone has died, they will try to contact the beneficiaries but can’t always track them down. In those instances, they will follow legal requirements and turn over the unclaimed life insurance money to the state.

How can I avoid having my life insurance benefits go unclaimed?

The best way to avoid the possibility of unclaimed life insurance benefits is to name a beneficiary and keep your records current. With most insurers, it’s as simple as filling out a form. 

You can also designate multiple beneficiaries and state which percentage of the payout should go to each one. In addition, check your policy regularly to make sure your beneficiaries are up to date. Marriages, divorces, new babies, and other big life events can all change who you want to protect after you’re gone. 

What should I do if I think I have unclaimed life insurance money?

The National Association of Insurance Commissioners (NAIC) can help customers locate life insurance policies of deceased loved ones through its lost life insurance locator service. Depending on where you live, your state might also have a directory where you can search for money that you’re owed with unclaimed life insurance money.

Want more information about life insurance? We’re here to help. eFinancial works with over 20 insurance companies to help you find the right coverage for you and your family. Give us a call or start your quote online today.


At eFinancial, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed and updated regularly to ensure the information is as relevant as possible.