One billion dollars. That is the amount of money state regulators estimate is sitting on life insurers' books and owed as death benefits, some of it languishing there for decades.
To make a broad but warranted generalization, life insurance companies generally don’t like to pay out death benefits. After all, they make their profits on betting not to pay out death benefits or to pay out less in death benefits than they take in as premiums.
A recent article in the Wall Street Journal may give you pause regarding whether you might be owed some life insurance money.
According to state regulators, as much as one billion dollars is languishing in the form of uncollected life insurance death benefits. All is right by the insurers, however, as most policies require the beneficiary to file a claim to collect. This occurs when a beneficiary doesn’t collect or doesn’t know that they are entitled to collect.
Unjust or not, this phenomenon has raised regulator suspicions and, out of good will or regulator urgings, some companies have started programs to determine if policy holders have passed and whether claims ought to be filed.
Still, it is a difficult enterprise, and one of the reasons insurers let beneficiaries make the claims in the first place, so there is room for error. So, if you want to ensure that you (or your loved ones) receive all that is owed, consider doing some sleuthing yourself. The original article has some advice regarding how to find out about a missed policy.
An even bigger lesson is for policy holders, and estate planners generally. One billion dollars sits in policies that were meant to care for the policy holders’ families, and it is there mostly because it’s unknown.
As a result, the most important part of proper planning, whether elaborate or simple, is making your family aware of what you own, what your plan is, and how it is to work. This especially includes any life insurance you may own.
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Reference: The Wall Street Journal (December 31, 2011) “Are You Owed Life Insurance?”