You purchased a life insurance policy so that your loved ones would be financially protected after you’re gone. So what could be worse than paying your premiums for years, or decades, only for your benefits to end up in insurance purgatory while your grieving family is left empty-handed? Unfortunately this is all too common. But what makes this problem so much more tragic is that it is so easily preventable. Here’s what you can do to make sure it doesn’t happen to your beneficiaries:
Seems pretty simple right? 1) You take out a policy, 2) you name some beneficiaries, and 3) you tell those beneficiaries about it. Well, somehow policy holders tend to leave out step 3 a lot more often than you might expect. In fact the most common reason that life insurance payouts go unclaimed is that the beneficiaries simply weren’t aware that they were named on the policy in the first place.
This is the easiest way to prevent unclaimed benefits, so if you currently have a policy, or are in the process of applying for one, make it a priority to tell your potential beneficiaries right away. It might not be anyone’s favorite topic of conversation, but it could prevent a lot of needless heartache, and headaches for them in the future.
If your beneficiaries are young children, or otherwise unable to handle the money directly, and you opt to leave your money to them through a trust, make sure a responsible adult family member or friend knows about it. Whoever you chose to tell, whether it’s the beneficiaries themselves, or a trusted guardian, make sure you provide as much information as possible about your policy (i.e. the location of the policy, the name of the insurance provider, your agent’s contact information, etc.). The more information you provide, the less legwork they’ll have to do to track your policy down.
KEEP YOUR POLICY ACCESSIBLE
If your beneficiaries are unaware of your policy, there’s still a good chance that they’ll find it while sorting through the files and personal documents you leave behind. It is critical that you keep good records and make sure your life insurance policy is left in a place where your beneficiaries can find it.
Of course, a life insurance policy contains a great deal of sensitive personal information, so you don’t want to be reckless with it. Keep it in an accessible, but secure place, like a locked file cabinet, and make sure the key is easy for your family to locate. It’s also a good idea to keep an electronic copy of your policy on file, just in case your hard copy gets lost or damaged.
REVIEW YOUR POLICY ANNUALLY
Term life insurance policies can last anywhere from 10-30 years, and a lot can happen in that amount of time. It’s a good idea to review your policy at least once per year to see if you need to make any changes. This will give you a chance to see if your policy could use an update due to a marriage, a divorce, having a child, becoming a caretaker or guardian etc. This will also give you a yearly reminder to notify beneficiaries that they have been added to your policy, because, once again, the very best way to prevent unclaimed life insurance benefits is to make your beneficiaries aware of your policy in the first place.
CEO - Licensed Agent
In my 20+ years as an independent life and disability insurance broker, I have personally assisted thousands of clients with their life and disability insurance needs. Being independent, I represent many highly-rated insurance companies and, because I am not beholden to any one insurance company, my focus is to find the right company and policy for each individual client. I believe that when people shop for insurance (or anything else, for that matter) on the Internet, they are looking for a simple, non-intrusive, non-pressure method of doing so. I strive to treat my prospective clients with the utmost respect and I believe an educated prospect can make the right decision without sales pressure. Please feel free to contact me at your convenience.