Some people are blessedly organised. They keep everything on record; files neatly labelled for your convenience should they not be around to guide you through a lifetime’s worth of documents.
But not everyone is that organised. And when family members pass away without leaving a folder marked “After my death”, it can be hard to keep track of all their policies and funds. According to ASIC around $1 billion is available to be claimed from lost bank accounts, shares, investments and life insurance policies. In 2013, there was more than $80 million in unclaimed life insurance policies in Australia?1.
You may not even know they had a life insurance policy. If that’s the case, it can get lost or remain unclaimed for years. It may require a bit of detective work to find a family member’s unclaimed policy , but the effort may pay off. Certainly, the internet has made it far easier for you to find and claim lost life insurance policies.
How unclaimed life insurance is processed
Life Insurance policies become unclaimed after seven years of inactivity. Depending on the type of life insurance, this inactivity can be due to a halt in premium payments or the insured person’s death. Or because personal details have not been updated and the insurer has lost contact with the insured person or their beneficiaries.
After seven years (recently changed from three years), all unclaimed life insurance in Australia is deposited with the Australian Securities and Investments Commission (ASIC); ASIC transfers these funds to the Commonwealth of Australia Consolidated Revenue Fund. The money stays there until it is claimed by the rightful owner, however long that may take2.
It doesn’t matter how long the policy has remained dormant – there’s no time limit on claiming unclaimed policies. On behalf of life insurance companies, ASIC’s unclaimed money search database goes as far back as 1952 3. Since 1 July 2013, the interest this unclaimed money earns has been tax free4.
How to find and claim lost money
The easiest way to make sure the right money goes to the right beneficiary is to review your dearly departed’s documents. If you know a policy exists, all you need to do is find the details of the insurance company and contact them immediately.
If you’re unsure whether your loved one held a policy, check their financial records, including bank statements, for any premium payments. It can be a good idea to also consult your dearly departed’s former superannuation fund, which may have provided them with life insurance automatically.
However, if the insurance has remained unclaimed for seven years or more, your best bet is to use ASIC’s unclaimed money search tool. After all, ASIC collects the money, so it’s well-equipped to get the forgotten benefits into the right hands.
If you quake at the idea of browsing through complicated spreadsheets online, you needn’t worry – the tool is designed for even the most technically illiterate to use! ASIC often writes to individuals and organisations whose names appear in its records. If you receive such a letter, you can jump on the money search tool and search for your name. If your name pops up in the search, follow these steps:
Avoid paying a fee
Keep in mind, many companies out there offer paid services to recover your unclaimed money. But really, there is little need for you to pay anyone in order to recover your unclaimed benefit. You can do most of the work yourself, easily and without spending a cent, using ASIC’s free service.
How to prevent unclaimed policies
As you can see, ASIC has tried to make it a fairly easy process for you to claim lost money from life insurance policies. But of course, it’s best to avoid unclaimed policies altogether. You can do this by keeping your beneficiaries informed. Let them know exactly what life insurance policies you have and with whom.
Keep a digital and hard copy file with all your insurance details in it. Either scan and email or give your beneficiaries a photocopy of any policy details and let them know where you store the originals. Make sure the details for you and your beneficiaries are always up to date. Notify your insurance company if your address changes and let your insurer know how to contact your beneficiaries.
This post was brought to you by Budget Direct Life Insurance