When my father passed, he left detailed instructions about his finances and life insurance policies. As he was an organized man, this was not surprising. What was surprising was that he had 5 different life insurance policies. Instead of getting one large policy, he added policies as his circumstances changed and his income increased. This was not a bad idea but I kept thinking as I filled all 5 claims, “What if he hadn’t written down all this information?”
A little-known fact is that unclaimed life insurance is a huge problem. You may have applied for life insurance benefits to provide for your family and diligently paid the premiums. However, your policy could be lost, misplaced, or forgotten. If so, your beneficiaries won’t know to collect your life insurance benefits.
Insurance companies are not obligated to contact you about a life insurance policy they are holding, even if they learn that the insured has died. Therefore, if your family does not know what policies you have, they do not know to file a claim upon your passing.
In a June 11, 2016 article, Unclaimed billions: Are you owed a life insurance payout?, USA Today reported that major life insurance companies have agreed to pay $7.4 billion so far in unclaimed benefits.
The obvious answer is to tell your beneficiaries. Keep your family updated on your insurance policy information.
To get a downloadable PDF form to help you record life insurance policy information, click here.
If your beneficiaries are young or you do not want them to know the details until you pass, you can inform a trusted financial advisor. Or give details to your personal representative (executor) that you have named in your will.
First, your beneficiaries must contact the insurance company upon your death. Then, they will have to produce an original death certificate with the claim. Funeral directors help order death certificates. However, there is a charge for each death certificate. Your beneficiaries could ask the insurance companies to return the original death certificate once they have reviewed it.
You can find out if a deceased family member had a life insurance policy. The National Association of Insurance Commissioners (NAIC) has a life insurance policy locator its website.
Need more tips to jump-start your estate planning? Get Estate Planning for the Sandwich Generation: How to Help Your Parents and Protect Your Kids today.