When Michael Hartmann’s father passed away, the Allstate agent figured it would be a walk in the park claiming the payout on his life insurance.
“I couldn’t find his life insurance policy,” said Hartmann. “I said as a life insurance agent, this has got to be easy. I’ve got to be able to find it. I couldn’t find a darn thing. There’s no-one helping you, there’s no database with active life insurance policies.”
This is but one example of how unclaimed life insurance policies are becoming a huge issue in North America.
“It’s such an issue and until it happens to you, you don’t think it’s an issue,” says Hartmann. “It’s recognized only too late and by that time it’s like looking for a needle in a haystack.”
Now Oklahomans will likely become familiar with Hartmann’s plight.
Their ability to find unclaimed life insurance policies got more difficult after the state’s senate passed an industry-backed bill that would require companies to check at least twice a year to see if holders of newly written life insurance policies have died, but wouldn’t require verification of older policies.
The state does that now through a vendor working on a contingency basis.
It’s estimated that over $1 billion in life insurance is waiting to be claimed by beneficiaries in the United States.
North of the border, experts estimate unclaimed assets – including life insurance policies – across the country could top $4 billion to $7 billion.
It’s difficult to pinpoint a dollar figure for solely life insurance because Canada is way behind other developed countries in having comprehensive unclaimed property legislation for all its residents.
But the OmbudService for Life and Health Insurance (OLHI), a Canadian independent complaint resolution and information service for consumers, completed a total of 147 searches and found 65 unclaimed policies in 2013. Last year, the number rose to 186 searches, with 93 unclaimed policies retrieved.
“They say over 25 per cent of life insurance policies go unclaimed, it could be over 50,” said Hartmann. “There are over 250 million people in the US alone with life insurance, that’s a huge number.”
In most jurisdictions insurers are not required insurers to look for beneficiaries – the onus is on the consumer.
All the beneficiary needs to find the policy is the name of the company the policy was bought from.
It sounds simple but given the nature of life insurance there are a myriad of reasons the company name gets lost along the way: people can be secretive about their policies and not tell their beneficiary; documents can get lost; people forget after 40 or 50 years.
“The industry doesn’t have a main database for them to look up this kind of information so the process becomes really manual for each individual insurer,” said Andrea Zviedris a spokesperson for the OLHI.
With that and the experience with his father’s policy in mind Hartmann created FindYourPolicy.com, a life insurance database where an individual or their agent can register for free the company name they have insurance with.
Policy holders can enter the information for free and beneficiaries can search using either the last four digits of their government issued personal ID number or their date of birth.
“When I tell consumers they love it,” said Hartmann. “Insurance companies don’t like me too much. I’ve talked to the life insurance companies and their CEOs, and they said you service is so needed but we can’t use you because you’re going to generate too many claims. It’s bad for their bottom line. They bank on the fact that consumers don’t find it.”