It’s a dilemma that occurs far too often. A husband dies without ever letting his wife know about life insurance he owned with her as beneficiary. A father or mother dies and the children were never told if they had life insurance or not. People lose life insurance policies all the time and either don’t know they lost it or don’t remember and never get a new one. Really!!!! A church loses one its’ most devoted family members and givers and never knows that she left behind a life insurance policy with the church as beneficiary.
I talked with a former claims director for a large life insurance company today and asked him what insurance companies do when it should be obvious that a claim should have been filed on a paid up policy. What he told me, and the company he was with is a household word, was that in the absence of a claim nothing was ever done. So using one of my larger clients as an example, if he died and no one filed a claim, the company would not only keep the $78,000 a year in premium they had earned, but also the cash value of $1.2 million and never pay out a death benefit.
While this scenario would be a little rarer on policies that aren’t paid up, it could still happen. Suppose your husband keeps his checking account in the same shape as mine, running on the approximate method with overdraft protection. But, he bought life insurance and didn’t want it to lapse so he opened a checking account you didn’t know about and kept plenty of money in there to pay the monthly eft premium payments on the policy?
The reason it happens is important to address, but even more important is what do those left behind do to find out the bottom line.
First, check all of the paper work you can find and anything that says insurance on it, look into it. Check checking and savings accounts, and military allotment drafts to see if any premiums were being paid to insurance companies. Check with employers to see if there was any group insurance or former employers to see if group insurance had been converted and kept.
One of the best resources for the type of search you might need to do is the Medical Information Bureau, the MIB. They have a database of literally almost everyone who has applied for life insurance that goes back about 15 years. If they applied you have a place to call to see if they were approved and if there was life insurance in force.
Bottom line. The scope of unpaid claims on life insurance because claims aren’t filed is something not I can even begin to fathom. Make sure you tell people that you took out life insurance. Make sure they know where the policy is and who to call if you pass away. Don’t do the right thing and then drop the ball. That isn’t what you wanted.