Are insurance companies required by law to make an effort to locate a beneficiary?
If someone has a life insurance policy that a beneficiary is not aware of, when they die is the insurance company required to make an effort to locate the beneficiary, or can they simply keep their mouths shut and hope nobody tries to collect?
Also, if a beneficiary is also deceased can the heirs of the beneficiary collect on the policy?
Answers:
Well, it's a minor effort. They have to send a letter to the executor of the estate, or send a letter to the address listed in the beneficiary clause on the policy.
Regarding "hoping nobody tries to collect" - it doesn't work that way. Because they don't KNOW that the insured person died, until they are notified by a next of kin, beneficiary, or executor. FIRST someone who knows the person died notifies the insurance company and files the claim - without knowing who the beneficiary is. THEN the insurance company tries to contact the beneficiary.
If there is no contingent beneficiary, then the procedes go to the ESTATE of the beneficiary, to be distributed however the beneficiary's estate is set up - either through the will, or if there's no will, by a judge in accordance with state law, but ONLY after all the beneficiary's debts are paid off.
Number 1, insurance companies are not notified by any organization when someone dies. It is up to the beneficiary to notify the company of the death.
Number 2. If the beneficiary is deceased and a contingent (second) is not named, then when the will is probabted, the executor of the estate can file and have the benefits paid to the estate. So to answer you question, yes the heirs can collect on the policy.