Millions in life insurance goes unclaimed every year — here's how to see if you're owed money

Ideally, beneficiaries of life insurance policies have all the information they need to file a claim. Sadly, that's not always the case: More than a billion dollars has gone unclaimed in the US because beneficiaries don't know they're listed on a policy or can't find proper documentation.  

In 2011, the National Conference of Insurance Legislators created the Unclaimed Life Insurance Benefits Act, which standardized procedures for unclaimed policies and required insurers to periodically check the Social Security Administration's Death Master File database to identify deceased policyholders and their beneficiaries.

It's not a foolproof method, however, and millions in benefits goes unpaid each year. Thankfully, there are several ways to see if you're missing life insurance payouts that are owed to you.

• Gather records to start your search 
• Check financial documents and personal contacts  
• Try the NAIC Life Insurance Policy Locator Service 
• Check with your state's unclaimed property department
• Other ways to search for unclaimed policies
• How to file a life insurance claim
• Bottom line

To look for a specific life insurance policy, you'll need the individual's official death certificate, which includes their full legal name, Social Security number and dates of birth and death.  

If you do find a policy, you'll also need your driver's license, passport or other government-issued ID to verify your identity when you submit a claim.

If you have an idea of who named you a beneficiary and which insurer they had a policy with, start your search there. If not, reviewing financial paperwork like income-tax returns and bank records may provide clues. (A policy even could be stored in a safety deposit box.)

If your loved one was employed when they died, their company's HR department may be able to tell you if they had any group life insurance or supplemental life insurance.

Friends, family, coworkers, previous employers and even clergy can also be a useful resource — or at least lead you to lawyers, accountants or other professionals with relevant information. 

Finding a lost life insurance policy can be a good motivator to decide if you need coverage yourself. If you do need a policy, CNBC Select recommends Guardian as a standout for its affordability, flexibility and high financial strength rating.

The National Association of Insurance Commissioners (NAIC) website has an online form available to anyone who believes they may be a beneficiary of an unclaimed life insurance policy.  The locator has matched consumers with more than $6.7 billion in benefits since 2016, according to the NAIC.

To use the service, you must have the suspected policyholder's legal name, Social Security number and dates of birth and death.

Information submitted to the NAIC is submitted to participating insurance companies, which search their records for open policies. The process can take several months.  

Life insurance companies use Social Security Administration records to determine if a policyholder is deceased. They search for beneficiaries, as well, but if they're unsuccessful, the funds are declared unclaimed, or "dormant."  

Each state has different rules on how long it takes for a policy to be considered dormant, according to the Unclaimed Property Professionals Organization, though it's typically between three and five years. (In Arizona and North Dakota, the dormancy period is one year.)

If it's been that long, you can search for unclaimed funds in the state where the deceased last resided or where they bought their policy.

The National Association of Unclaimed Property Administrators' Missing Money site allows you to search multiple state databases for unclaimed funds at the same time — not just for insurance payouts, but money from utility companies, retailers and others. It's a free service, and users can begin the claims process instantly.

Several life insurance companies have online policy search tools, including John Hancock, MetLife and New York Life.

If you think you may be the beneficiary of a U.S. military veteran's policy, the U.S. Department of Veterans Affairs has a searchable database.

If you discover you are the beneficiary of a life insurance policy, you're going to have to file a claim to receive your payment. You'll need several copies of the person's death certificate. You can get them through the vital records office of the state where the person died.

You can either work with an insurance agent to contact the insurer or do it directly yourself. In addition to the death certificate, you will probably need to provide identification and details about yourself to complete the claim form before you submit it online or through the mail.

You'll also need to choose how you want to receive your benefits — in most cases, either as a lump sum or as an annuity paid out regularly from an invested account.

There's no deadline to file a life insurance claim but the faster you file, the sooner you'll get a payout. In most states, insurers have up to 30 days to review a claim and send payment.

If you think someone named you as a beneficiary on their life insurance policy, there are easy-to-use online tools that can guide your search. In some cases, you may need to gather documentation first and speak with a family member or representative.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every life insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of life insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best life insurance.

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