What is unclaimed life insurance? This is typically term life insurance money that was not claimed by a beneficiary. It is surprising how many millions of dollars may arise in unclaimed life insurance every year. This usually may be attributed to ignorance. Many beneficiaries may not know about the money that is owed to them. If the life insurance company is not able to find the beneficiary or the recipient is not notified of the death of the insured, then the money may not be claimed.

The life insurance companies may first try to transfer the money to the right place, but it could take a long time and may end up in unclaimed property divisions. Usually, it is advertised online and via newspapers. The life insurance company and the state profit from the unclaimed funds as well.

Recently, in a revealing article called “Tracking Down and Collecting Unclaimed Life Insurance” by Paul Sullivan of NYTimes.com, the journalist investigated the state of New York and found out that the state received $400,287,736 in unclaimed life insurance from the years 2000-2010. However, it paid out only $64,772,228.  Vanessa Lockel from the Office of the State Comptroller confirmed that this amount was just a small portion of the $10.5 billion that the state acquired in unclaimed life insurance from the year 1943 onwards.

Some insurance companies may have entire departments to help assign unclaimed monies, and once the money is transferred to the state, it generally becomes public knowledge, but the state may use it in the meantime for state business.

Some insurance policies are permanent and others are term life insurance policies. Depending on whether you choose a permanent or term life insurance policy, your options may be different. However, you should typically want to have a clear policy for yourself and beneficiaries, telling them that these life insurance policies exist. They should typically be informed so that they can file claims when you pass on. To learn more about choosing life insurance beneficiaries, read the article “Term Life Insurance: Preparing for Declaring Your Beneficiary.”

When you have a policy for your beneficiaries laid out in a permanent or term life insurance policy, you may be more assured that you are helping to take steps for better financial security for you and your beneficiaries.