According to a recent CNBC news report, one in every six hundred people do not receive the money they were entitled to in a life insurance policy. The reason is often twofold: (1) the life insurance company fails to seek out the beneficiary; and/or (2) the person who purchased the life insurance policy failed to leave the beneficiary with the information necessary to collect.
Upon the death of the policyholder, life insurance companies are to search for the beneficiary and alert them of their payout. However, it has been discovered that many companies have made very little or no attempt at all to locate beneficiaries. Since this discovery, many financial companies are now using the Social Security Administration’s “Death Master File” to locate beneficiaries. If a beneficiary cannot be located, the payout will be turned over to the state’s unclaimed property offices.
The amounts turned over are staggering. For example, as part of a settlement with Florida, American International Group (AIG insurance) recently turned over more than $25 million in unclaimed life insurance benefits.
To ensure your life insurance money does not remain idle in the state’s hands, here’s a few tips:
- If you have a life insurance policy, communicate with your loved ones and let them know they are listed as the beneficiary of your policy. Obviously, there are instances where you will not want to do this, such as if your beneficiary is a minor or you simply don’t want your beneficiary to know of his/her pending inheritance. That’s where step numbers 2 & 3 come in.
- At the very least, leave a financial spreadsheet with your Last Will and Testament so your loved ones know who to contact to claim their inheritance. Leaving a concise list of your assets and the company contact information is far easier than your loved ones rummaging through your papers, mail, and belongings to try to and piece together their inheritance. This list should set forth not only life insurance, but all of your property and its location.
- Work with a financial advisor. Not only can they help you reach your financial goals and desires, financial advisors are a great resource for consolidating all of your property whereabouts in one spot. In addition, financial advisors can ensure your policies properly name your beneficiaries and maintain current addresses and contact information to make sure your loved ones receive their inheritance upon your death.
- Visit these websites to access records of unclaimed assets: www.missingmoney.com, www.unclaimed.org, www.greatiowatreasurehunt.com; and www.acli.com (The American Council on Life Insurance).
You work hard for your money during your lifetime. Practice these simple steps to ensure your beneficiaries receive the inheritance for which you’ve worked and planned.
The information contained herein is for informational purposes only, and is not legal advice or a substitute for legal counsel. You should not act or rely on any information herein.