Unclaimed life insurance policies

By Frank N. Darras

DarrasLaw


You've worked hard to assist your clients in choosing the right life insurance policy in the event of their death. But are you missing one of the most important lessons -- how to educate your clients on the importance of keeping their policy in a place where it will be easily found by his or her executor or beneficiary.

It is ironic to think that your client has made an effort to plan for their loved ones' financial security, but then fails to inform people that they have done so. However, its estimated that between one-quarter and one-third of all life insurance policies go unclaimed upon the death of the insured. As a result of not providing information about life policies, hundreds of millions of dollars annually go unclaimed by beneficiaries who aren't aware that a policy exists.

Why is this happening? One of the biggest reasons so many life insurance policies go unclaimed is because people have an almost superstitious tendency to avoid talking about death. By avoiding the topic, the only thing that your client is doing is avoiding the inevitable.

When you finish or deliver the application, it is a perfect opportunity to talk with your clients about how life insurance policies go unclaimed and how to keep that from ever happening to their loved ones. Here are some simple tips to share with your clients:
    * Set up a "Last Will and Testament" and make sure that the life insurance is mentioned.

  • File their will with contact information for the life insurance company, including the policy number.

  • Even though they've defined beneficiaries, make sure to include that information in their will so that there's no uncertainty.

  • Keep insurance policy documents either in a safety deposit box (with account information included the will), or in a clearly labeled file cabinet (or fireproof safe) in the home.

  • Most importantly, talk to the beneficiaries or family members about the policy.
Another reason for such a large number of unclaimed life policies is due to the demutualization of some of the largest insurance companies. It could be worth your while to go through the list of companies that were demutualized, determine if any of your current or past clients had policies, and contact them. You could help your clients get a substantial windfall from the demutualization. What better way to show your client that you are concerned about their financial well-being?

One final note, in the event a beneficiary or family member contacts you about a client's demise your knowledge about your client's policy will be of invaluable service to them. Helping the family or beneficiary navigate the claims process will reinforce your status as a trusted advisor, both to the deceased and to them.

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