There are 9.9 million accounts of unclaimed property in Florida, worth more than $1 billion. The contents of the accounts can be actual property, cash or securities. According to the Florida Department of Financial Services, about $355 million is related to unclaimed insurance. It seems not all beneficiaries know they're beneficiaries.

A life insurance policy is a fairly easy way to make sure your loved ones have something to live on when you die. You pay the premiums over the years, and when you pass away the benefit amount goes to the beneficiary (or -ies) named on the policy. For most of us, it's one of the things we tell our family members or our lawyer about when we have The Discussion -- you know, the one about what happens when you die.

But a recent New York Times article pointed out the consequences when not everyone is so open. The reporter talks about a man who discovered his mother had a safe-deposit box and a life insurance policy after she died. He didn't even know they'd existed before that. Another man discovered a policy in his father's documents that he hadn't known about. That policy, though, names the father's girlfriend as beneficiary -- something else his son didn't know about.

An insurance company can't distribute benefits if it can't locate the beneficiary -- or if it doesn't know the policyholder has died. Insurance trade associations say that the companies do their utmost to locate a beneficiary. If they can't find them, they turn the money over to the state.

Insurance is regulated by the states, so not all timelines or procedures in Florida will match the ones in New York. Generally, though, once a policy is deemed inactive the insurer has between two and seven years to transfer the money to the state.

In the meantime, that money is collecting interest that the insurance company gets to keep.

Once the unclaimed benefits go to the state, the state can continue to look for the beneficiary (with an ad in the paper, for example) or simply hold onto it until someone steps forward to claim it. The money must be available to the claimant, but the state can put the funds to other uses until a beneficiary turns up.

And, during that time, the money collects interest that the state gets to keep.

We'll continue the discussion in our next post and offer some resources for policyholders and beneficiaries.

Source: New York Times, "Tracking Down and Collecting Unclaimed Life Insurance," Paul Sullivan, 02/ 25/2011