Unclaimed Funds Could (Happily) Surprise Boomers
When Connecticuts state treasurer reported there was almost $60 million in unclaimed insurance company proceeds belonging to nearly 70,000 Connecticut residents, the announcement underscored the potential for untapped reserves that baby boomers may be able to access.
Unclaimed funds that may be available to boomers go beyond life insurance policies and include bank accounts and securities as well as safe deposit boxes. These funds could include their own forgotten or misplaced assets or those of elder parents or relatives that they were not aware of.
In fact in State Treasurer Denise L. Napplers announcement on Nov. 9, it was noted that roughly $10.9 million in unclaimed property claims were paid out during fiscal year 2004. And, $58.7 million has been returned to individuals and businesses in the 6 years ending June 30, 2004.
Statistics offered by Unclaimedassets.com, estimate that unclaimed funds and property are in the $300 billion-$400 billion range.
Data on the site shows the scope of funds that have yet to be claimed: $9 billion in unredeemed bonds; $10 billion in stock and an annual $500 million in stock dividends; $88.5 million in income tax refund checks; 25% of all insurance death benefits; and, stock, policy credits and/or cash payments in addition to policy benefits.
Reasons for funds remaining unclaimed can vary from 30- to 40-year maturity periods for bonds to unreported name and address changes. The site says insurance benefits go unclaimed because of long dormancy periods and a lack of awareness by family members that such policies exist. There is no central clearinghouse for unclaimed life insurance policies, according to Unclaimedassets.com.
There is no national database for heirs to track assets, according to interviews. State comptrollers and treasurers do, however, keep track of unclaimed funds when institutions turn those funds over to state governments.
For example, interviews suggest there is no place to go to track life insurance policies. Both the National Association of Insurance Commissioners, Kansas City, Mo., and the American Council of Life Insurers, Washington, say they do not keep a database of unclaimed life insurance policy benefits.
Companies say they do make efforts to track both the address of policyholders as well as the addresses of beneficiaries and payees. For instance, in the case of policyholders, says Janet Gillespie, a spokesperson for Prudential Financial, Newark, N.J., if mail is returned, the steps taken are as follows: remailing; a search of policyholder records; attempts to identify a new address through postal records and, if found, issuance of a query letter to verify information. If no information is found, then the file is set aside and reopened if the policyholder surfaces, she adds. The process takes approximately 2 weeks, Gillespie continues.
For beneficiaries or payees, those who make payments on a policy, Gillespie says a letter is sent to the residence of the payees last address; an attempt is made to reach the payee by phone; other Prudential records are checked; assistance is sought from the field office; and then assistance is sought from outside agencies such as the Social Security Administration or Motor Vehicle bureaus.
Brendan Bridgeland, director of the Center for Insurance Research, Cambridge, Mass., is urging the NAIC to expand information provided on its Web site through its Consumer Information Source tab. In a letter to regulators, Bridgeland says that several times a year, he gets consumer calls”usually the child of a recently deceased parent” looking for a life insurer “that no longer does business under its original name.” The change, he continues, can be due to a merger, reorganization or use of a “brand name.”
Other organizations such as the Insurance Library Association of Boston also receive and process large numbers of requests, Bridgeland writes. Policies “often involve paid-up policies, including industrial policies, burial policies and other popular small-face value life insurance products sold to low and moderate income consumers.”
The long-term nature of life insurance contracts can contribute to this loss of tracking, he adds.
The problem could be ameliorated, according to Bridgeland, if CIS is used to list a defunct life insurer and its successor company.
The problem also can be helped in part if a laundry list of assets is created and maintained by policyholders, says Craig Limoges, a certified financial analyst and principal of Limoges Investment Management, Vancouver, Wash.
Limoges recalls one elderly client who was transferred from her regular residence to a retirement facility. Her children lived out of town and when she did not leave the proper forwarding address, her account was closed. The funds, totaling $30,000, escheated to the state, he says.
In such a case, the representative of the estate has to prove a connection to the deceased in order to reclaim the funds, he explains, and the process can take 2-3 months after the initial claim is filed.
An advisor should repeat the issue of an inventory during periodic meetings with the client to determine if anything should be added, he says.
Among the reasons property eludes owners are old age, change of address, divorce or just general confusion with financial matters.
He recalls a client whose father lived in Switzerland and had not told his children what financial assets he had. The family retained the fathers residence until statements from the different financial accounts were received at the fathers address, he says.
Eric Tashlein, a certified financial planner with Connecticut Capital Management Group, LLC, Milford, Conn., says he recently had to reclaim funds from a grandmothers account. The process was actually fairly simple with the major requirement being proof they were related. The process took between 3-4 weeks, he added.
He says the family was informed that the name Tashlein had appeared on a list, and upon checking, it was his grandmother.
Tashlein, who is the 2005 president of the Financial Planning Associations Connecticut chapter in New Haven, also says the best way to avoid having assets ending up in unclaimed state pools is to maintain a laundry list of assets.
Reproduced from National Underwriter Edition, December 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.