Years ago, I wrote about an investigative report that caught some of the country’s largest life insurers sitting on death benefits — their position, more or less, was that it wasn’t their job to tell you a policy existed. You had to know to ask.
A lot has happened since then. Some of it’s good news. Some of it isn’t, and it’s the part I still see more often than I’d like.
What Changed: Illinois Started Requiring Insurers to Look
The following year, Illinois passed the Unclaimed Life Insurance Benefits Act. It requires any insurer doing business in the state to run its policies against the Social Security Administration’s Death Master File — the same database used to flag when someone has died — at least twice a year, and to make a real effort to track down the beneficiary when it finds a match.
That’s a meaningful fix. The specific complaint in my original post — an insurer waiting on its hands because no one called — isn’t supposed to happen anymore, at least not for policies this law reaches. I’d like to tell you that closed the book on this issue. It didn’t.
What Didn’t Change: Nobody Can Pay a Claim They Don’t Know Exists
A death-match search only works if the insurer’s records are clean enough to make the match — a maiden name, a misspelling, an old address, or a policy issued under a company that’s since merged or been sold can all be enough to slip through. And the law only reaches the insurer’s side of the equation. It does nothing for the bigger problem, which is that most families don’t have the information in the first place.
The numbers back this up. In NAIC’s most recent consumer research, only 29% of beneficiaries knew the name of the insurance company on a policy meant for them, only 25% knew the benefit amount, and among Gen Z beneficiaries, just 23% knew where the policy documents were even kept. Fewer than four in ten Baby Boomers said they felt prepared to step into the beneficiary role — and that number gets worse with every younger generation.
I see this pattern constantly, and it’s rarely about carelessness. It’s a policy someone bought through a job they left, or a small mutual company that’s been renamed twice, or a paper policy that’s been sitting in a filing cabinet nobody’s opened since a parent passed. None of that shows up in a database search unless someone already knows to go looking.
What I Tell Clients to Do About It
This is the part that actually belongs in an estate plan. When completing your estate plan, make sure there’s a current list of every policy and account, kept with the estate planning documents. Additionally, make sure the person named as executor or agent actually knows it exists and where to find it. A trust or a will can be flawless on paper and still fail a family in practice if nobody can locate what it’s supposed to distribute.
A few things I ask clients to include on that list: every life insurance policy, the carrier name and policy number; and where the actual documents are, physical or digital, and how your executor gets access.
You don’t need a complicated system. A single page in a folder with your will and power of attorney, updated when something changes, does the job. What matters is that it exists and that someone besides you knows about it.
If You’re Searching for a Policy Right Now
If you’re trying to find out whether a family member had coverage, there are a few free resources worth trying before you assume nothing exists: NAIC’s Life Insurance Policy Locator Service, a free national search that checks participating insurers using a death certificate and has helped consumers recover more than $765 million in benefits since it launched in 2016; Illinois’s own unclaimed property database, I-Cash (icash.illinoistreasurer.gov), where the state is currently holding more than $5 billion in unclaimed property; and MissingMoney.com for a multistate search, since a policy from an out-of-state employer or insurer won’t necessarily show up in Illinois’s database alone.
Let’s Make Sure Your Family Never Has to Search
I’ve been doing this work in Kane and the surrounding counties for over twenty years, and the estate plans that actually work for a family aren’t just the ones with the right legal language. They’re the ones where someone besides the client knows what exists and where to find it. If it’s been a while since you looked at your own list — or if you’ve never made one — contact us or call (847) 714-2866 and let’s fix that before it becomes your family’s problem to solve.
About the Author
Lauren E. Jackson has been licensed to practice law in Illinois since 2003. She founded Lauren Jackson Law to help clients throughout Northern Illinois — with offices in St. Charles and Elgin — with real estate, estate planning, probate, and business succession matters. Full bio →