The CBS new program “60 Minutes” recently did an exposé on insurance companies not paying death benefits on life insurance policies, often because the beneficiary never comes forward because he or she doesn’t know the policy exists.
CBS said 25 of the nation’s biggest life insurance companies recently agreed to pay more than $7.5 billion in back-death benefits while another 35 insurance companies have not settled and remain under investigation for not paying when a beneficiary is unaware there was a policy.
To be sure, your policies will serve the purpose you intended. So here are a few action points to ensure that your policies are up to date, secure and your beneficiaries are aware of your policy.
– Do an insurance summary. You are the one who should know what policies you have. But many of us forget the details of our policies, especially later in life. Do an insurance summary. This is simply a list of policies you have today. A summary should list each policy, insurance company, date issued, policy number, type of policy (UL, WL, Term, etc), death benefit, annual premium, insured name, owner, beneficiary, agents name and contact info (your agent can help you and your beneficiary).
– Find your old policies, and store them in a safe place. Tell your spouse and your beneficiary where your policies are. They will need them. Your beneficiary is not required to have the policy to file a death claim, but it helps. Give your trusted advisers and your family a copy of the insurance summary you have done.
– Get a current annual statement. Contact each company and ask them to send you a current “Annual Statement,” and ask them to tell you your current beneficiary. The Annual Statement shows most of the policy information you need. And double check your beneficiary, especially if you are divorced.
Many companies have changed names or been acquired by another company, like Provident is now UNUM. Your old policy is still good, even if another company now administers it. You can search the Internet for the name of your old company and that will lead you to the current company you should contact.
– Get a current “In Force Illustration” for each policy. Contact each company and request an “In Force Illustration.” This document will show a projection of values for the life of the policy. Some policies were projected to last for your lifetime, but with low interest rates for the last decade, the policy you have may not last for life, at current premiums. Once you get the In Force illustration, an agent can help you interpret the information, and perhaps restructure the policy for better benefits. Companies also offer assistance, but an independent agent may have other options for you.
So, get to work. You have more information than your beneficiaries. Start by writing down what you know. Then, you can do an Internet search for your insurance company to get the policyholder service contact information. Most companies allow you to contact them through their website to request this information. They also have a policyholder phone number you can call to request this information. Do not depend on information you get over the phone. Clerks can misunderstand your question, or only partially answer what they think you are asking. Trust only the written Annual Statement or In Force Illustration.
If you feel lost, most agents are willing to help. Even if you incur a small fee for policy summaries or duplicate policies, your time and effort will be rewarded at the time of claim.
Doug Beville is an independent insurance and financial advisor in Chattanooga. You can reach him at Doug@profitplansllc.com.