Prudential
Years ago, Valerie Jundt's brother told her that his employer, Amoco, was offering him a life insurance policy at a reduced premium. Just 25 and single, and with nary a thought he wouldn't outlive his parents, he named his sister as the policy's beneficiary. But a year later, when he died in a motorcycle accident, that phone conversation with him was the last thing on her mind.

Later, when she remembered it and inquired after the policy, she faced a logistical rigmarole. In the end, she never got the money to which she was entitled.

Today, Jundt helps people in similar situations achieve better outcomes: She's the managing director of consulting and advisory services at Keane, a leading provider of unclaimed property communications, compliance and consulting services in the U.S.

It's Yours ... But Only If You Ask

Traditionally, beneficiaries of life insurance policies have had to claim for themselves the money owed them; otherwise, it could be seized by the state. If you were delinquent in filing or -- a more likely situation -- didn't know you were someone's beneficiary, those funds could vanish into the public coffers. Unpaid life insurance has totaled as much as $1 billion over time, according to the ABA.

So now, some insurers are proactively seeking out beneficiaries like Jundt to make sure the money goes into its intended hands.

"It's ironic," said Pete D'Arruda, president of Capital Financial Advisory Group in Cary, N.C. "Usually when you have money, you don't look for who to give it to."

According to the ABA, at least three insurers -- MetLife (MET), Prudential Financial (PRU), and the John Hancock segment of Manulife Financial (MFC) -- have started to seek out beneficiaries. The efforts to do so are led by a task force headed by Florida's insurance commissioner and a separate movement in New York.

The issue also has been getting some attention from state governments. The National Conference of Insurance Legislators created a model law, the Unclaimed Life Insurance Benefits Act, which would requires regular beneficiary location efforts. So far, four states have passed the act.

One-third of Americans have life insurance policies, according to D'Arruda, and though the percentage of unpaid policies remains small, for those effected, the losses are significant.

"We know the percentages represent real people, and we've been working with policy makers on ways to ensure all policyholders get the benefits they deserve," Bruce Ferguson of the American Council of Life Insurers told The Wall Street Journal.



The issue has become more pressing in the wake of the recession -- and not just because individuals need the money more.

"The states have become so aggressive recently on claiming unclaimed funds," D'Arruda said. "Insurance companies want to make sure the people who paid the premiums and deserve it get it, and not the states, who have become really greedy lately."

The unclaimed life insurance policies, after all, are easy pickings.

"We call it 'government gone wild' -- trying to claim funds that aren't theirs," D'Arruda said.

Another cause for the more intensive effort to find beneficiaries may be a PR push by the insurers.

Insurance companies like MetLife came under fire two years ago when it was discovered that they were trying to give structured settlements to policy beneficiaries instead of lump-sum payouts, explained D'Arruda.

Agents tried to make beneficiaries take their money in a series of payments, thus letting the insurance company hold more money and earn interest on it. If a recipenting of a death benefit, really wanted the payment spread out, he'd be better served by other options, such as taking the lump sum and purchasing a private annuity.

"When you have the check in your hand, you have a lot better choices," D'Arruda said.

In addition, as the Wall Street Journal points out, insurers like MetLife used the Social Security death database self-servingly to cut off payments to deceased annuity owners, but made no effort to find the heirs their deceased policy holders.

"It's an act of goodwill and good PR to track down the beneficiaries," D'Arruda said.

It's also a matter of practicality. The insurance company, which has already underwritten the life insurance policy, wants to get it off its hands. Insurance companies have to pay a fair amount of interest to hold the money -- between 1% and 3%, says D'Arruda. It's easier for insurance companies to get the money off their hands and into those of the intended recipients.


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