There are some sites that claim that their unclaimed insurance funds are the solution to your financial problems. Let’s take a look and see if this is true.
What are Insurance Policies?
Insurance policies are contracts made between the policyholder and the insurance company. This contract arises when people pay premiums, or payments to insure themselves against future loss, damage, or liability. Most likely this is done through monthly payments that can be automatically drafted from a bank account. The money collected by the insurance company is then invested until it’s time to pay out claims. When a person makes an insurance claim, the claim is processed and payment distribution begins. Unclaimed insurance funds occur when a policyholder’s account goes dormant without any activity. The money can remain unclaimed for months or years as companies attempt contact with the rightful owner of the account. Once a certain time has passed
What are Unclaimed Insurance Funds?
Unclaimed insurance funds refer to money that is collected from insurance policies and not assigned to or claimed by the policyholder. State governments manage unclaimed insurance funds as a state fund. The money can be used for programs such as energy assistance, veterans’ services, and child protection services. The money can also be given back to the person it belongs to or donated to charity.
States designate an office responsible for holding unclaimed insurance funds and overseeing their transfer and disbursement. In California, the Department of Insurance (CDI) holds unclaimed insurance funds until they can be transferred and disbursed. The department will hold the funds until the State Controller’s Office (SCO) can transfer them. The CDI disburses the money to the SCO via check, wire transfer, or electronic funds transfer .
Where do Unclaimed Insurance Funds Come From?
Unclaimed insurance funds come from life insurance policies, health insurance policies, annuity contracts, traveler’s checks, and other valuable papers. These items are associated with an owner but the last known address is unknown or incorrect. The following types of companies typically hold unclaimed insurance funds: non-life insurance companies, insurance agents’ unissued checks, stock and bond brokers, mortgage loan companies, utility companies, trucking companies, court-appointed receivers, or trustees who cannot find the owner of funds held in their possession.
Insurance policies become unclaimed when policyholders move without notifying the company issuing the policy. When a person cancels an insurance policy, they are required to notify the insurance company and fill out a form to cancel the policy.
The owner of a life insurance policy that is unclaimed can be reported by members of the public using a Life Insurance Policy Locator Service. The service was established by the American Council of Life Insurers (ACLI). In California, ACLI operates the Life Insurers’ Consumer Services Department (LICSD). LICSD works with other states to help people find lost life insurance benefits.
The CDI has also formed a public-private partnership with ACLI to help Californians reconnect with their unclaimed insurance funds. This partnership will expand access to services that reunite consumers with their unclaimed insurance funds.
How are Unclaimed Insurance Funds Disbursed?
The CDI distributes unclaimed insurance fund money to the SCO. Life insurance companies, for example, must turn over any missing or unknown owner’s unclaimed insurance funds to the CDI. Once received, the CDI holds life insurance company-owned funds and unissued checks and distributes them to the SCO. The SCO holds those funds until the owner of the policy is found or makes a claim. If you think you are owed unclaimed insurance money, contact your insurer first.
If the CDI cannot find the owner of an insurance policy or any other item associated with an unclaimed insurance policy, the funds are transferred to the CDI’s Unclaimed Property Fund. Once in this fund, the Treasurer of California can make disbursements to support state programs.
What government bodies are responsible for overseeing unclaimed insurance funds?
The office that manages unclaimed insurance policies depends on where they are located. In California, the CDI manages unclaimed insurance funds that are held by non-life or life insurance companies, health, and dental insurance, stock and bond brokers, mortgage loan companies, utility companies, trucking companies, court-appointed receivers or trustees who cannot find the owner of funds held in their possession.
The SCO oversees unclaimed property from other sources, such as safe deposit boxes, stock and bond brokers, court-appointed receivers, or trustees who cannot find the owner of funds held in their possession.
What are examples of unclaimed insurance funds?
An example of unclaimed insurance money is coverage for lost life insurance policies. The cumulative value of unredeemed lost life insurance benefits was $5 billion as of 2012, up from $2 billion in 2005. Another example is paychecks that remain uncollected after an employee leaves a job.
What is an example of unclaimed insurance money?
Unclaimed property includes many different types of funds, including stocks and bonds, bank accounts, utility refunds, contents from safe deposit boxes, life insurance, annuities, unpaid wages or commissions, mineral royalty payments, traveler’s checks, unused gift certificates, or unidentified savings deposits .
What is unclaimed insurance money used for?
Money from unclaimed insurance policy benefits is transferred to California’s Unclaimed Property Fund. Money from this fund can be used to support state programs or returned to owners.
What are Unclaimed Property Funds?
The California Department of Business Oversight also manages unclaimed property held by insurance companies, real estate brokers, securities brokers and agents, and securities clearing corporations. Unclaimed property refers to money or any other tangible property such as stocks, mutual funds, and bank accounts that are kept by an insurance company because the owner has stopped making premium payments and the owner has not made a claim within a certain time frame. The CDBO holds unclaimed property in its Financial Security Program (FSP) for at least four years.