If you are the administrator or the executor of someone’s estate, you are responsible for tracking down the estate’s assets.
The estate assets could include the death benefits from a life insurance policy on the life of the person who just died. Tracking down life insurance benefits is not always easy.
Until Illinois legislators enacted these new laws and regulations, estate administrators and family members had to think and act like detectives.
Family members and their attorneys often had to go through old files, review checks and electronic payments, find the name and address of the new life insurance company after the original company was sold, and contact financial advisors and labor union representatives to track down policies on the life of the deceased.
This time consuming task falls in the midst of the grief and confusion that ensues after the death of the loved one when most people are overwhelmed.
In most families, the money from a life insurance policy or annuity is important at the very beginning of the estate administration process because it provides for support of the surviving spouse, the funeral and burial, the costs of administration, and outstanding medical bills. It can also pay estate taxes if any are due.
If you trust that your loved one's insurance company will start sending benefits automatically after their death, you are unfortunately mistaken. An article published last year in a local newspaper highlights a little-known trend in the Illinois life insurance industry.
Many times, when someone with a life insurance policy dies, the company providing that insurance does not reach out to the family and benefits go unpaid.
In January 2017 the Illinois State Treasurer released the Task Force Final Report on the topic of Unclaimed Life Insurance Policies. This report revealed that many insurance companies were engaging in practices that resulted in cheating families out of benefits under life insurance policies and annuity contracts.
On January 1, 2017, Illinois enacted the Unclaimed Life Insurance Benefits Act which requires life insurance companies to perform a comparison of its insureds', annuitants', and retained asset account holders' in-force policies, annuity contracts, and retained asset accounts by using the full Death Master File on or before December 31, 2017, and semi-annually thereafter. When a match is identified, within 120 days the insurer must make good faith efforts to locate the beneficiary or beneficiaries and provide the appropriate claims forms or instructions to make a claim.
The Illinois Department of Insurance (DOI) rolled out the Life Insurance Policy Locator Service in July 2016 to help families, attorneys, and executors of estates find lost life insurance money.
The DOI provides the service free of charge to anyone living in Illinois.
After your loved one dies, either you or your attorney can contact the DOI and submit necessary information to start the search process.
According to the DOI website, the DOI will then:
- Forward the request and related documents to all Illinois licensed life insurance companies.
- Ask that companies search their records to determine whether they have any individual life insurance policies or annuity contracts in the name of the deceased.
- Ask that companies respond directly to the request only if they have any individual life insurance policies or annuity contracts in the name of the deceased, and if the requestor is authorized to receive this information.
Approximately 500 insurance companies are involved in the search process. The insurance companies have 60 days to respond to every inquiry.
The Illinois Department of Insurance makes it their mission to protect consumers by providing assistance and information.
As of December 31, 2015, the Illinois Department of Insurance had recovered proceeds for more than 11,000 beneficiaries with a total value of over $213 million.
If you believe you may be a beneficiary of a loved one's life insurance benefits, you can submit a search request online or through the mail.
Creating an online account is faster and allows you to track the progress of your request.
To create an account, visit the Life Insurance Policy Locator website. The DOI provides this step-by-step walkthrough to guide consumers through the process of creating an account and submitting their request.
Alternatively, you can print and mail in this paper form.
Joni Beth Bailey is an attorney in Southern Illinois who handles estate planning and estate administration.