Life insurance policies can go unclaimed because it is the family members’ responsibility to notify the insurance company when the policyholder dies; the insurer will not make an effort to locate beneficiaries – the company doesn’t even know an insured has died. So, How Do I Know If I Am A Beneficiary Of A Life Insurance Policy?
Definition of ‘Beneficiary’
Definition: In life insurance, the beneficiary is the person or entity entitled to receive the claim amount and other benefits upon the death of the benefactor or on the maturity of the policy.
Description: Generally, a beneficiary is a person who receives benefit from a particular entity (say trust) or a person. The eligibility to be considered for the benefits is confirmed either as per the specifications in the policy documents or by other legal norms such as that for a legal heir. The insured person is usually asked to mention the name of the beneficiary (who he would like to bestow the insurance proceeds upon his death) at the time of commencement of an insurance policy. There are also provisions for making a contingent beneficiary in case the primary beneficiary is no more or does not qualify the age criteria at that time.
How Do I Know If I Am A Beneficiary Of A Life Insurance Policy?
Legislation attempts to help beneficiaries be found
Because policyholders often have an aversion to talking about their own death or discussing who’s going to inherit money, beneficiaries might not even know a policy exists. That’s why it’s so important for policyholders to reveal life insurance policy information before they die.
MIB Solutions, which tries to locate policies for beneficiaries through its database of life insurance application data, says that “it is possible, if not likely, that millions of dollars in life insurance goes unclaimed.”
That number has now reached billions.
While some companies have already taken on some of the burden, individual states are creating legislation requiring life insurance companies to make concerted effort into notifying the beneficiaries of policies. To date, 20 states have passed legislation, with more following suit.
“We are obligated to honor the terms of life insurance contracts, and anyone with questions about a policy should contact the company that issued it,” says Whit Cornman of the American Council of Life Insurers (ACLI), an industry trade group.
But if you’re unsure whether you’re the beneficiary of a lost life insurance policy, you may be at a dead end if you don’t have a copy of the policy or know which company issued it.
How to search for a life insurance policy
The ACLI has a number of tips for those who think they might be due money from life insurance policies.
- Sort through the deceased’s papers and address books for clues.
- Look through bank check books and/or canceled checks to see if any were written to pay premiums.
- If you find a policy, contact the insurance company even if you’re unsure whether it is still in force. It’s helpful to contact life insurance companies directly by using a list from either the state insurance department or Best’s Insurance Reports found in most libraries. Don’t forget that for most inquiries you’ll need a death certificate and documents that prove your status as a close relative or intended beneficiary of the deceased.
- Call the employee benefits office at their last and previous places of employment, or check with the union welfare office, if warranted.
- Review income tax returns for the past two years to look for interest income and expenses.
- Contact any law offices where the deceased my have been advised.
- Check the mail for up to one year after death for premium notices, which are usually sent annually. If the policy is paid up, there may not be any notice of premium payments due. However, you may find an annual statement regarding the status of the policy, or even a notice of dividend.
- If the death is an old one, check with the deceased’s state’s unclaimed property office to see if any money from life insurance policies may have been turned over to the state.
Recommended Article: How To Find Out If Life Insurance Policy Is Still Valid
The Steps for Making a Claim
It’s going to take anything from a few days to a few weeks for the insurer to check up on everything before approving a claim.
We’ve outlined a step-by-step guide for beneficiaries when they have to make a claim. The 5 steps are as follows.
Step 1 – Gather All Relevant Policy Documents: To claim on a life insurance policy, the beneficiary will need plenty of documentation. Some are readily available and some are not, such as the death certificate.
The beneficiary could look up the original policy document, including the schedule. Of course, the insurance provider will also have all of this on record.
The insurance company will usually be able to look up all of that. It’s just going to take longer.
Step 2 – Get a Copy of the Deceased’s Death Certificate: Perhaps not surprisingly, the beneficiary will need a copy of the death certificate.
In Australia, it can take up to a week to get a death certificate. Since the goal is to make the process faster, the beneficiary would want to get a certified copy of the document.
For example, the funeral director can certify a copy of the certificate. That way, the beneficiary won’t have to go to the regular document certification sources. And once obtained, they will be able to lodge the claim right away.
If they need to get an advancement for the funeral, they can seek this when they file the claim. Of course, this is only possible if it’s among the policy features.
Step 3 – Contact the Insurer as Quickly as Possible: With all the required documents at hand, it’s best to initiate the claim soon as possible.
The beneficiary can contact the insurer over the phone or email. If the life insurance is through the deceased’s company, they’ll want to contact the employer.
After they’re informed, the insurer will send over the claim forms, probably with a checklist of required documents. Alternatively, the claim form itself will indicate what documents are needed. This process might be different from one insurance company to the next.
Step 4 – Complete the Claim Form: In filling out the claim form, the beneficiary would want to be aware of all the required fields and boxes. They might also want to verify that the form was correctly filled out before submitting.
The beneficiary will want to include all the supporting documents. Upon receipt, the insurer will formally assess the claim.
Step 5 – Be Ready to Wait for the Claim to Process: Ideally, the insurer will have everything they need and approve the claim in a few weeks.
It’s just that things rarely go that smoothly with life insurance claims. The insurer might ask the beneficiary for more information. Commonly, this could be medical records and more.
Having arrived at a decision, a representative from the insurer will inform the beneficiary. If everything checks out, a reputable life insurance company will never try to reject the claim. Even so, the beneficiary may need to be patient – this is going to take several weeks to months.
And, it’s not final if the claim is rejected. The beneficiary can still appeal the decision. Possible reasons for a claim rejection might include false information and suicide. For the latter, most life insurance policies provide that the sum insured will not be paid if it’s committed within 13 months of the policy going into effect. Learn More