When planning your will, it is unwise to remain as silent as the grave.
While most Americans know the importance of an estate plan, only about half have one, and another 51% have not discussed their inheritance plans with their heirs.
A survey by LegalZoom highlighted that 72% of older Americans intend to leave a legacy, but only 48% have a plan in place(1). To make matters worse, 39% of young Americans say they have not discussed financial plans, such as inheritance, with relatives. This will leave many heirs in the dark about the assets that will be bequeathed when a parent or close relative dies.
Take Helen for example. Her father died 12 years ago, and her mother, Bridget, didn’t know he had life insurance at the time. As they were going through some documents, Helen found a letter from the insurance company when her father died, saying they would be sending a check to pay for his insurance. Bridget admits she doesn’t believe she received it.
Although the widow was clearly owed the money, a call to the insurance company revealed that it was too late to claim the money. Helen wondered if there was any other way they could claim the payment her father wanted them to receive.
Here’s what you need to know about unclaimed life insurance policy payouts, and how to communicate the details of your will before it’s too late to avoid a similar situation.
When you buy life insurance, you enter into a legal agreement with the insurance company to pay a certain amount to your beneficiaries if you die or are seriously injured(2). When the policyholder dies, the beneficiary can file a claim with the insurance company, and once the compensation is paid, the policy ends. It is also important to note that policyholders must maintain premium payments to keep coverage in effect.
Life insurance can help pay for expenses related to the policyholder’s death, such as medical bills or funeral expenses. The money can also be used to meet the beneficiary’s needs: their own living expenses, debts, or even large discretionary purchases.
About 51% of adults have some type of life insurance, according to Western & Southern Financial Group (3). The majority have individual coverage (55%), while the remaining policyholders have employer-provided coverage or a combination of both.
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If you are like Helen and her mother and have not yet filed a qualifying life insurance claim, the good news is that there is no deadline to file a claim(4). If you’re not sure whether you need a benefit or don’t know which insurance company your loved one is insured with, you can check with the National Association of Unclaimed Property Administrators, which has resources in every state where you can search for unclaimed policy amounts (5). The National Association of Insurance Commissioners also offers a policy locator service that you can use to search for any policies your loved ones may have (6).
If Helen and her mother are unable to find the information, they can follow these steps to file a new claim with her father’s insurance company:
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Find policy information through documentation or by asking your insurance company.
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Gather the required documents to fill out the insurance company’s claim form.
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Choose a lump sum or annuity policy.
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Then submit your claim. There may be delays while the insurance company investigates, but they should follow up as needed.
It is important to prepare your loved ones for the end of your life. This includes discussing your will, distribution of your estate and any insurance that family members will benefit from. While these conversations may be uncomfortable, focus on planning as a gesture of kindness to your loved ones and help them avoid the financial burden of your death.
If you’re not sure how to prepare, talking to your attorney, estate planner, or financial advisor can help make the conversation easier and ensure you’re making the right decision for your family.
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We rely only on vetted sources and reliable third-party reports. For more information, see our Editorial Ethics and Guidelines.
Legal Zoom (1); Forbes (2); West & South (3); Progress (4); National Association of Unclaimed Property Administrators (5); Policy Orientation Services (6).
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.