Some life insurance policies aren't discovered at the time of death. In fact, sometimes a policy might not surface until years after the insured has passed away. It doesn't matter how long ago the insured died, it's worth checking out the insurance provider to see if the policy was in force at the time of death. If the insurance company turns the funds over to the state, states such as North Carolina have no collection time limit.
Length of Time
Many beneficiaries don't claim insurance proceeds for several months after the death of the insured, primarily because of other tasks of settling the estate. When this occurs, the insurance company pays interest on the death proceeds from the date of death. You'll normally have no problem finding the company if the policy was relatively new, but older policies may be difficult to track since companies merge, sell out or change names.
What Happens When the Insured Misses a Payment?
Term insurance lapses when the insured misses a premium. Whole life insurance, however, may not lapse if it has substantial cash value. The insurance company borrows funds from the cash value to make premium payments on the insurance, if that's one of the policy provisions. When the cash value is too low or there's no premium loan provision, the insurance company may convert the policy to a paid-up whole life policy with a smaller face amount called reduced paid up insurance or extended term insurance. This occurs only if the insurance company has no idea the insured died.
If you find the policy already lapsed, there's still hope for payment. If the policy was in force at the time of the insured's death, the company pays the death benefit. As a beneficiary or executor for the estate, your job is to prove the date of death by supplying the company with a death certificate. Some companies require an original certificate.
If the insured dies and the company knows about the death but can't find the beneficiary or receives no claim on the funds, the life insurance company turns over the property to the state for safekeeping. The length of time the insurance company holds the property before it turns it over to the state varies from state to state but normally is between three to five years. Most states now offer an unclaimed property website you can check for life insurance proceeds.