Billions of unclaimed life insurance policies plague North America

Billions of unclaimed life insurance policies plague North America

Billions of unclaimed life insurance policies plague North America

When Michael Hartmann’s father passed away, the Allstate agent figured it would be a walk in the park claiming the payout on his life insurance.

“I couldn’t find his life insurance policy,” said Hartmann. “I said as a life insurance agent, this has got to be easy. I’ve got to be able to find it. I couldn’t find a darn thing. There’s no-one helping you, there’s no database with active life insurance policies.”

This is but one example of how unclaimed life insurance policies are becoming a huge issue in North America.

“It’s such an issue and until it happens to you, you don’t think it’s an issue,” says Hartmann. “It’s recognized only too late and by that time it’s like looking for a needle in a haystack.”

Now Oklahomans will likely become familiar with Hartmann’s plight.

Their ability to find unclaimed life insurance policies got more difficult after the state’s senate passed an industry-backed bill that would require companies to check at least twice a year to see if holders of newly written life insurance policies have died, but wouldn’t require verification of older policies.

The state does that now through a vendor working on a contingency basis.

It’s estimated that over $1 billion in life insurance is waiting to be claimed by beneficiaries in the United States.

North of the border, experts estimate unclaimed assets – including life insurance policies – across the country could top $4 billion to $7 billion.

It’s difficult to pinpoint a dollar figure for solely life insurance because Canada is way behind other developed countries in having comprehensive unclaimed property legislation for all its residents.

But the OmbudService for Life and Health Insurance (OLHI), a Canadian independent complaint resolution and information service for consumers, completed a total of 147 searches and found 65 unclaimed policies in 2013. Last year, the number rose to 186 searches, with 93 unclaimed policies retrieved.

“They say over 25 per cent of life insurance policies go unclaimed, it could be over 50,” said Hartmann. “There are over 250 million people in the US alone with life insurance, that’s a huge number.”

In most jurisdictions insurers are not required insurers to look for beneficiaries – the onus is on the consumer.

All the beneficiary needs to find the policy is the name of the company the policy was bought from.

It sounds simple but given the nature of life insurance there are a myriad of reasons the company name gets lost along the way: people can be secretive about their policies and not tell their beneficiary; documents can get lost; people forget after 40 or 50 years.

“The industry doesn’t have a main database for them to look up this kind of information so the process becomes really manual for each individual insurer,” said Andrea Zviedris a spokesperson for the OLHI.

With that and the experience with his father’s policy in mind Hartmann created, a life insurance database where an individual or their agent can register for free the company name they have insurance with.

Policy holders can enter the information for free and beneficiaries can search using either the last four digits of their government issued personal ID number or their date of birth.

“When I tell consumers they love it,” said Hartmann. “Insurance companies don’t like me too much. I’ve talked to the life insurance companies and their CEOs, and they said you service is so needed but we can’t use you because you’re going to generate too many claims. It’s bad for their bottom line. They bank on the fact that consumers don’t find it.”

  • ira zapin 3/23/2015 10:31:56 AM
    Just think of the problems that could develop for agents if they join this database. Not the least of it would be privacy issues. False claims made by imposter beneficiaries. Loans fraudulently made. Data base hacking. Trouble for family members not included as beneficiaries. It goes on and on. and don't think the insurance companies will protect the agent
    Post a reply
  • Michael Hartmann 3/27/2015 6:28:45 AM
    Ira, thank you for your comment. I would like to address your concerns.
    1. Privacy Issues: when an agent sells a policy they inform the client that they must tell their beneficiary so that it is claimed when the time comes. No one can steal your life insurance policy since the insurance company must guarantee with certainty the beneficiary is the person on the policy.
    2. Imposter Beneficiaries: It is the responsibility of the insurance company to make sure the money is not given to the wrong person....they must do their due diligence properly and so far they are doing a good job. And if everyone thought that they were not doing a good job, no one would buy life insurance.
    3. Data base hacking: If someone where to hack our database, they only get the last four digits of your government issued ID number (in the US it is your Social Security number) Your date of birth and the company name you have life insurance with....that's it. Keeping that in mind, credit cards get hacked all the time and that is much more to be concerned about than what information we store.
    4. Trouble with family members not included as beneficiaries. When you register on our system you do not put down the beneficiaries names...all you can see is the company name you have life insurance with. The life insurance company will never ever give that information out. So there should not be any problems with potential beneficiaries knowing or not knowing. Even if you notify the insurance company of the death of the insured, they are not allowed to tell you over the phone who the beneficiary is. They need proof of death and then they will seek the person out based on the information listed on the insurance policy.
    5. It goes on and on. Sorry but there are way more positive reasons to have us included then to not..... If you speak to consumers they understand the need for our service. We are a consumer protection service, protecting from loss or miscommunication.
    Thank you for your questions....If you have any other concerns please let me know.
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