Some people are exceptionally 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 has that level of organisation. And for those who leave you behind without a compendium of documentation to help you through the time after their 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 may remain unclaimed for years.
It may require a bit of detective work, but the effort may just pay off. Meanwhile, the internet has made it far easier for you to confirm 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 a result of a halt in premium payments or the insured person’s death. It could be because personal details became outdated and the insurer has lost all manner of contact with the insured person or beneficiaries.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 can be 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. ASIC’s unclaimed money database stores lost money from as far back as 1952 for Life Insurance companies3. Even better news is that since 1 July 2013, unclaimed money in ASIC earns interest tax free4.
How to find and claim lost money
Naturally, 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 existed, you should only need to check through their documents for 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 potential premium payments. It can be a good idea to consult your loved one’s former workplace as well as any professional associations as they may offer group policy benefits to members.
However, if plenty of time has lapsed since the policy has matured, your best bet is to use ASIC’s unclaimed money search tool. After all, ASIC collects the money, so it is well equipped to get the benefits into the right hands.
If you are worried about the idea of browsing through complicated spreadsheets and matrices online, you needn’t worry – the tool is designed to help those with even the most basic technical skills.
For a start, you may first receive a letter in the mail stating that you have unclaimed money waiting for you. ASIC sends notifications out to all those listed in their database once they receive the unclaimed money.
If you discover you are entitled to some lost money, you will be given an Original Transaction Number (OTN). Write down this number as you’ll need it to make your claim.
You will need to approach the original insurer to confirm that you’re the intended beneficiary. The Life Insurance company is listed in the search results. Sometimes, the Life Insurance provider no longer operates. If that’s the case, you will have to browse through ASIC’s list of Life Insurance companies and Friendly Societies to find out who is responsible for your claim.
If you are found to be the beneficiary, the company will notify ASIC. ASIC will return the funds to the Insurer, who passes it on to you. ASIC generally takes 28 days to process a claim.
Avoid paying a fee
Keep in mind, many companies offer paid services to recover your unclaimed money. But really, there is little need for you to pay anyone in order to receive 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 Life Insurance policies. But of course, the best result comes from avoiding unclaimed policies altogether.
The best thing you can do for your beneficiaries is to keep them informed. Let them know exactly what policies you have and which life insurance company you have it with.
Since many claims are confirmed online now, you can forward any email communications between you and your Life Insurance company to your beneficiaries. 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. Always notify your insurance company if you’re moving address. That doesn’t just apply to you either. Make sure your Life Insurer always knows how to contact your beneficiaries.
This post was brought to you by Budget Direct Life Insurance