At least $1 billion in benefits from misplaced or forgotten life-insurance policies are waiting to be claimed by their owners. The odds that you’re one of them are 1 in 600, more favorable than your chance of winning $100 on a Powerball ticket. And although you can’t expect a million-dollar jackpot—the average unclaimed life benefit is $2,000—some payouts have been as high as $300,000.

The big stash results from a quiet death-benefit dodge. Auditors in California, Florida, New York, and other states found that life insurers were using Social Security’s Death Master File to identify annuity owners who had died so that they could stop making payments to them. But they weren’t checking it to find deceased policyholders and pay their beneficiaries.

Worse, when premium payments stopped after policyholders died, insurers often used the policies’ cash value to continue the payments until the cash was depleted, California’s state controller found.

Six major insurers—AIG, Forethought, John Hancock, MetLife, Nationwide, and Prudential—have agreed to search for dead policyholders and beneficiaries more diligently. And other carriers are being investigated.

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Searching for a lost policy

Start simple. If an immediate family member or other close relative died more than a few years ago, benefits may have already been turned over to the unclaimed property office of the state where the policy was purchased. Go to missingmoney.com, a website of the National Association of Unclaimed Property Administrators, to search records from 38 states and the Canadian provinces, Puerto Rico, and the District of Columbia. The pull-down menu under Links connects you to a map and addresses for unclaimed-property agencies.

If your name or a potential benefactor’s name produces a hit, you’ll need to prove your claim. Required documentation, which can vary by state, is detailed in claim forms, and a death certificate might be necessary. If you don’t already have that key document, contact the vital records office in the state where your relative died, or go to vitalchek.com, the official document service provider for more than 400 government agencies.

Contact the insurer. If you know or suspect that a particular insurer underwrote the policy, contact that carrier’s claim office by phone or online. Not everyone is legally entitled to answers; the deceased’s executor and immediate family—spouse, domestic partner, children, grandchildren, siblings, grandparents—have the most legal standing. "But the insurer will know, and if they determine you’re a beneficiary, they’ll send you a packet to verify your identity so you can collect," says Steven Weisbart, chief economist at the Insurance Information Institute, an industry organization. "If you’re not a beneficiary, they’re not going to tell you anything."