Beneficiaries and Missing Life Insurance Policies

Last week the American International Group agreed to pay $11 million to resolve a multi-state investigation by a group of state insurance regulators, into the handling of death benefit payments to beneficiaries when the policy holder dies.

AIG joined several other insurers that already settled, agreeing to check their lists of policy holders regularly against the Social Security Administration’s master “death file” database and to put more effort into locating beneficiaries.

Traditionally, insurance companies have required beneficiaries to file claims to receive benefits from life insurance policies. That has meant that claims sometimes are never filed — perhaps because policy documents were lost, or because beneficiaries did not know a policy existed. But state insurance regulators, for the past two years, have been looking into the practices of large insurers and urging them to proactively identify policies that may be due for a payout.

State regulators have charged that insurers used the Social Security Administration’s list of recently deceased people to stop making annuity payments to dead customers, but, at the same time, did not use the list to check whether any life insurance policyholders had died.

Read entire story by Ann Carrns at the NY Times.

The American Council of Life Insurers has the following tips for finding missing policies.

Missing Policy Tips

The American Council of Life Insurers does not locate missing or lost life insurance policies.  Suggestions for conducting your own search are listed below.

Conducting Your Search

If you suspect your loved one had a policy, but cannot locate it, you may want to conduct your own search using the steps provided below. As an alternative, MIB, an insurance membership corporation, offers a policy locater service for a fee. For more information about this service, visit MIB’s Web site: www.policylocator.com.

  • Check your loved one’s papers and address and telephone books to look for life insurance policies and the names of insurance agents.  Contact every insurance company with which they may have had a policy, even if you’re not sure the policy is still in force.
  • Check with the employee benefits office at their latest and previous places of employment.  Or, check with the union welfare office.
  • Check bank books and canceled checks for the last few years to see if any checks may have been written to pay life insurance premiums.
  • Check the mail for one year after death for premium notices, which usually are sent annually.  If a policy has been paid up, there will not be any notice of premium payments due.  However, the company may still send an annual notice regarding the status of the policy or it may pay or send notice of a dividend.
  • Review your loved one’s income tax returns for the past two years.  Look for interest income from and interest expenses paid to life insurance companies.  Life insurance companies pay interest on accumulations on permanent policies and charge interest on policy loans.
  • Check with the state’s unclaimed property office to see if any unclaimed money from life insurance policies may have been turned over to the state.  If, after a number of years, an insurance company holding the unclaimed money cannot find the rightful owner, it turns the money over to the state. The National Association of Unclaimed Property Administrators’ website (www.naupa.org) includes links to each state’s unclaimed property office. For multi-state searches, www.missingmoney.com combines information from most, but not all, state unclaimed property databases.
  • Of course, you may wish to contact life insurance companies directly to see if a policy exists.  Each state insurance department has a listing of life insurance companies licensed to do business in its state.

Contacting the Company That Services Your Life Insurance Policy

If you are the owner or beneficiary of a life insurance policy written long ago, you may need help locating the life insurer that services and pays claims on the policy.

Over the years, a policy owner may lose touch with the life insurer due to frequent moves, or the company that issued the policy may have changed its name or merged with another company.

Two sources of information can assist you in finding the life insurance company that currently services your policy:

  • The state insurance department of the state in which the insured person resided at the time he or she bought the insurance policy.
  • Best’s Insurance Reports, available in the reference section of many larger libraries. This annual update lists insurance company names and addresses, as well as insurers’ name changes, mergers and other changes.

The best way to avoid problems with life insurance claims is for policy holders to discuss the policies with their beneficiaries.  Copies of the policy should be kept in a safe deposit box or with a lawyer or financial adviser, and make sure your beneficiaries know how to access them.

The Lawyer Referral Service of the New Hampshire Bar Association can refer you to an attorney to assist you with your estate planning needs.  Call 603-229-0002 or request a referral online.

 

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