Buying a life insurance policy should bring peace of mind, knowing that in the event of a death, family members will be able to cope financially. The disheartening truth is that many of these assets are never paid out to grieving families.
In reality, people are often financially unorganized when they die, with assets scattered about and if they have a Will, it is often out of date. Especially in old age, people can forget about a life insurance policy they took out years before, can misplace important documentation, or fail entirely to inform next of kin about the policy.
In Canada and some US states, insurance companies are actually NOT required by law to seek next of kin when a policy beneficiary does not come forward after a death. They are only required to take action when prompted by next of kin.
Many US states impose unclaimed property legislation which aims to protect consumers and reconnect families with their unclaimed life insurance policies. Such laws require an insurer to compare its policies and retained asset accounts against a death master file on a regular basis to identify possible matches.
In Canada, no such laws exist, allowing insurance companies to keep $ Millions in unclaimed life insurance policies, for which they have been receiving premium payments for years and years.