If you have recently bought life insurance and you have not informed your immediate family members, this may be a critical and costly mistake. Quite a significant amount of life insurance cash benefits in the United States goes unclaimed at the time of the policy holder’s death. The largest holders of unclaimed money are not banks, but life insurance companies. One fourth of all policy benefits qualified to be paid-out upon proof of death are unclaimed.
The main reason for this is that families and beneficiaries are unaware of their deceased’s policy or that they even purchased life insurance. In addition to this unfortunate predicament , life insurance companies do not make a proactive effort to analyze the national obituaries for recent deaths, and or locate beneficiaries. Life insurance companies may have the moral obligation to resolve their unclaimed policy benefits, however, there is a greater incentive for them to pocket the unclaimed money and add it to their overall cash reserve balance which is used to pay out other death benefits when they occur.
The best solution to avoiding this predicament besides keeping your agents business card in your wallet, is to have a informative talk with your spouse (if your spouse was not present when you purchased the life insurance policy) and family—if they are teenagers or older. I would invite the insurance agent for lunch or dinner. Perhaps, the described scenario is closer than you want to know your agent but he/she is the conduit to preserving your family’s legacy if you should suddenly pass away. It would be smart not to talk to children about percentage breakdowns on the life insurance policy death benefit. This would cause undue sibling conflict and stress, especially if you have a blended family made up of children from past marriages. It would be wiser just to let them focus on the fact it was a policy from Prudential, or AIG, or Banner Life Insurance Company or from whomever you bought it from.
Keeping the magnetic refrigerator calendar of the Insurance Agency / Agent who sold you the policy is very important, a visual reminder of the agent who is taking care of all your insurance needs is very important marketing mechanism for the agent but also a fine way to make a mental imprint in your family’s memory that you have life insurance and from which company. A great calendar event is to have a yearly review of your life insurance where you and your spouse/partner can discuss new changes in your financial horizon that may impact your risk exposure. I always invited my insurance agent to family breakfast once a year after we had an annual life insurance review. Your family members, especially your spouse must know where you have placed a copy of the signed policy packet which includes the details of your policy and most importantly the policy issue number. The safest place to keep one of several copies is a safe deposit box at the bank, and or with your attorney if you have one. In many states, the insurance agent who sold you the policy is required for 3 years to keep copies of the application you used to apply for insurance and other documents related to the issuance of your life insurance offer.
And remember, your offer of insurance is only an offer, until you make that first premium payment—then your life insurance is in-force. Many family not only in the United States loose track or worse yet, forget the name of the insurance agent and the insurance company from which he/she obtained a policy for the deceased. We all keep documents about our car insurance, home insurance , and health insurance readily available where all family member can locate. But what about life insurance, it’s something that is not designed to be used every month or a couple times a year.
Life insurance is a single trigger event contract-your death. Thus most people do not want to think about their own demise and logically forget about the accessible storage of the insurance policy just as quickly. This is why a annual insurance review is very important to have, not only does it remind you to evaluate your risk exposure in other areas of your life other than life insurance, but also you and your spouse are in constant relationship with the agent who sold you life insurance and perhaps other insurance products. Don’t become a statistic like so many families the world over, make copies of your policy, inform your family and meet your life insurance agent yearly.
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