Can we let insurance money sit with the insurance company with our penalty?

2 answers | Last updated: Sep 23, 2016
A fellow caregiver asked...


My Aunt passed away July 10` and left both myself and my wife a small insurance policy totaling under 150K. This is split 50/50 in each of our names according to the life insurance policy. The insurance company wants our bank account information to wire the money to us etc. We both forgot about the money and never sent in the paperwork. However, we still do not want to touch the money and want it just to sit with the insurance company due to various reasons.

Does a certain amount of time exist that we have to take ownership of the money or can it just sit with the life insurance company? Do we forfeit the money if we do not take it for two years or more? We have gone through probate court already, which ended April of 11`. We understand the money is not earning interest or any gains for us. We are located in FL.

Thank you,

Expert Answers

Barbara Steinberg is the CEO and founder of BLS Eldercare Financial Solutions, which specializes in helping families pay for long-term care for their loved ones. A registered financial gerontologist, she speaks regularly on the topic of paying for long-term care and is a financial expert for

An insurance company only pays the proceeds from a life insurance policy if a claim is made. If no claim is made, the money can remain with the company until the policy matures. This usually happens when the deceased insured would have reached age 95 "“ 100. The policy does accumulate interest until this time. On the other hand, the money may revert to the state after a period of time. This period is usually 7 years, but varies from state to state. Then you have to go to the state and prove you are the rightful beneficiary. Some states have implemented a statute of limitations that allows them to keep the money after a specified number of years have passed. While this is a recent development, many more states may do so to help with their budget problems. You risk losing the money if you don't claim it within the statutory time period. It is also possible that since the insurance company knows who you are, they will send you checks instead of wire transfers. Then you will have a limited time to deposit them.

Community Answers

Delfinamanotas answered...

Hello there, IMO the creditors can't garnish the life insurance benefits if it has a named beneficiary. After the death of the policy holder the policy benefits will go to the beneficiary and therefore can't be garnished for paying the debts of the deceased. But if the policy holder remains the owner of the plan at the time of her death, the policy would then get included in her estate and will be used towards paying the unsettled debts. You absolutely need to consult with an attorney as soon as possible to determine what exactly you need to do and if you are able to keep the proceeds or need to turn the proceeds over to the trustee in your case. Failure to do anything could be construed as a bankruptcy crime, so make sure you get some assistance to handle the situation immediately.

Regards, Delfina Manotas

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