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Question for the Money Doctors

Question submitted on Jun 25, 2014.


Our grand mothher past away and there is a policy nameing 3 people the beneficiaries me my sister and one other. we can't find or contact one person can we still collect on the policy without the 3rd party


The question you asked is an important question that no doubt occurs from time to time.

Insurance companies have the ability to be able to attempt to find missing beneficiaries and determine if they are deceased or not.  Having said that, sometimes beneficiaries who have died, have not been properly identified and reported to social security as deceased.

For those who can be contacted, the proceeds from the life insurance policy are paid to the beneficiaries as indicated on the policy as designated by the owner of the policy.

Essentially, the owner usually selects between two options:

1.  To pay out to the living beneficiaries only based on percentages dictated by the owner of the policy.  When a beneficiary is not alive at the date of death of the insured, that amount goes to the remaining beneficiaries on a pro-rata basis, which means if all beneficiaries were to receive equal shares, all remaining beneficiaries receive an equal portion of the insurance proceeds.  

2.  Per Stirpes.  To pay out to the beneficiaries, and when the beneficiaries are not alive, pay out to the heirs of the no longer living beneficiary (ies).

Consequently, the two named beneficiaries should receive their proper share in a reasonably short order provided the proper documentation has been submitted to the insurance company.  

If a beneficiary is entitled to receive proceeds, is alive, and cannot be located, a financial institution is generally required to turn over proceeds to the state after a number of years dictated by statute.  This is called "escheate". 

If funds have been escheated to the state, proper procedures should be followed with respect to the state that has the funds.  One can usually check the abandoned property section of the state to see if there are proceeds.  This is a good practice to go through for everyone, including yourself, to see if there are any monies forwarded to the state you live or where you lived in the past.  There is a prior question on this site that dealt with retirement plan accounts that are "cared for". 

If a beneficiary is not alive at the time of your grandmother's death, then the proceeds will be set aside and proceeds distributed pursuant to the options chosen in the policy by its owner.


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