Over the last month large insurance companies have settled with several states to pay out millions of dollars owed on life insurance death benefit claims. Basically several states have sued large insurance carriers and AIG, Prudential, Nationwide and several others have agreed to settle claims that they haven’t done all they could to locate beneficiaries who haven’t claimed life insurance death benefits. Going forward insurance companies will be required to check their data against social security records to locate beneficiaries. If they can’t locate beneficiaries, they will hand over the death benefit proceeds to the states’ unclaimed funds division. This is good news for consumers as insurance companies will be required to do more to find beneficiaries and provide them with money that is rightfully theirs.
What Can You Do to Make Sure Beneficiaries Get Your Life Insurance Proceeds?
Here are some things you can do to make sure your life insurance death benefit proceeds can get to
your beneficiaries as quickly as possible:
Make sure to include a social security number for your beneficiaries:
Some life insurance company applications won’t require you to list a social security number for your life insurance policy’s beneficiaries. Even if the company you apply with doesn’t require it, you should list beneficiary names and social security number. This will make it easier for insurance companies to locate them should they need to find them.
Review all policies:
Review all your current life insurance policies. That means if you have individual policies and your policies through your employer. Review that you have beneficiaries selected and social security numbers listed for them. Reviewing your policy every couple of years is a good idea anyway since you might want to make changes to your beneficiary designations anyway.
In addition make sure to update any changes on your policy. For example if you have moved you will want to update your address with the life insurance company. This will insure that you don’t miss a bill from the company and let your policy lapse, and also that your beneficiaries can potentially find mail from the insurance company and discover your policy in case they didn’t know about it.
Keep your policy in a safe place:
Keeping your policy in a safe place where others will be able to find it is also important. If at worse case your beneficiaries don’t know a policy exists, at least they will be able to find it if you keep it with other important documents, such as your will, insurance policies, etc. I suggest you keep a fire proof safe in your home, where these important documents should be kept.
Tell your beneficiaries about your policy:
While people often don’t want to tell their beneficiaries that they have money coming to them when they pass, it is a good idea to tell your beneficiaries about your life insurance policies. You don’t need to tell them how much life insurance you have if you choose not to, but you should at least tell them you have a policy and let them know which company your life insurance policy is with.
If you follow the tips in this blog post your beneficiaries won’t have a problem collecting on your death benefit proceeds and you can have the peace of mind that they are properly protected and can access the money that you’ve left for them.
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Author: Liran Hirschkorn