The sole purpose of life insurance is to provide money to the relatives of the deceased to cover things like funeral expenses and provide a modest income to replace the deceased's lost wages or salary. But many people die without keeping good records of their life insurance policies. In those cases, relatives don't claim the insurance benefits because they have no idea that that a policy even exists. Insurance companies are supposed to do their best to notify next of kin, but hundreds of millions of dollars still go unclaimed each year [source: Sullivan].
If an insurance company stops receiving premium payments on a life insurance policy, it has to transfer the unclaimed funds to the state treasury after two to seven years of inactivity, depending on individual state law. In the meantime, the total value of the benefits is reduced as the life insurance siphons off funds to cover missing premium payments [source: Sullivan]. It's in the beneficiaries' best interest to claim those policies as soon as possible, or else the funds could be reduced to zero.
There are no free online databases for searching private insurers for inactive accounts. You could contact your state insurance department and see what help they can offer, or you can pay $75 for a policy locator service operated by the Medical Information Bureau (MIB). MIB advertises a success rate of 30 percent in identifying applications for life insurance, which may or may not lead to existing policies [source: MIB].