Facts About Life Insurance Policies

It is an unfortunate time in a family’s life when they have to endure the loss of a loved one. Even more troubling is not to know how the funeral expenses are going to be paid if the person did not have insurance coverage, or the amount of insurance is inadequate. Believe it or not, many of these circumstances can be avoided if the deceased person had a will, or had at least informed his or her spouse or close relative of the available life insurance policies. Family members are responsible for notifying the life insurance company of the policy owner’s death. However, if the family is unaware of a policy, this cannot be done, and the policy can go unclaimed. Many families later realize that there is a lost life insurance policy.

A large number of insurance policy benefits go unclaimed because either the family does not know the policy exists, or they do not know where to find it. Therefore, it is possible that lost life insurance policy holders may be entitled to an unexpected windfall. A growing number of mutual life insurance companies have converted to stock ownership, entitling millions of current and former policy holders and heirs to receive stock and cash, in addition to the policy benefits.

For example, John Hancock Insurance did not have the current addresses for approximately 400,000 policy holders. Prudential had 1.2 million missing policy holders. By law, lost life insurance policy benefits and the unclaimed demutualization compensation is held in trust until the claimants come forward. A name change after marriage or a divorce, an unreported change of address or an expired postal forwarding order have all led to beneficiaries not claiming the policy payouts. Annually, only a small percentage of the money that is actually available is ever claimed.

Due to the fact that insurance companies are not required by law to seek for beneficiaries, it is appropriate for people to communicate with loved ones in order to know policies exist. Death is not an enjoyable conversation; however, your loved one should not want to pay monthly premiums for a policy that is no one ever benefits from.

Preventing a lost life insurance policy means having that conversation. If your loved one dies before you get the information, there are other ways of finding out. Their bank might be to provide transaction details which show payments made to an insurance company. In some states, insurance companies are required to release the funds to the state as unclaimed property.

Article Source: http://www.debtfinancearticles.com

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