Why is The Life Insurance Industry Under Investigation?
I got a text from one of my clients Sunday night. They had just watched the report that Lesley Stahl did on 60 Minutes – Life insurance industry under investigation. I had missed the 60 Minutes story but was able to Google it and get the details. In a nutshell, life insurance companies pay death claims when a beneficiary files a claim. This is spelled out in the life insurance contract. It is unfortunate that many beneficiaries don’t even know that there is a life insurance policy on their deceased loved one.
The Bottom Line: Don’t Keep Your Life Insurance a Secret.
When we make major purchases we should include instructions. When you buy a house, what should happen to your house when you die? You buy investments, what do you want your investments used for when you die? Why should life insurance be any different?
I buy life insurance because I want my family to have the money to continue to do the things that they need and want to do when I am gone. Isn’t that what life insurance is all about? Income replacement?
Who and why are we buying life insurance for? Let them know about it. Instruct them on what to do when something happens to you. This is easily done with a list of instruction that you can include with your policy. It is already laid out in the life insurance policy that you purchase but make it easy for them.
Just last year a client of mine died after purchasing a $500,000 policy 2 years earlier. My client had no children of his own. He had recently purchased a new home and taken out a mortgage. He wanted to have the mortgage paid off with life insurance proceeds. My client named a nephew as the beneficiary. Because he let his nephew know about the policy and that he was the beneficiary, the claim came to our immediate attention. The nephew contacted us because our client let him know who we were. It is really simple. When you buy life insurance, let the beneficiary know.
Let them know where you keep your policy. Although the actual policy is not necessary to file a death claim, knowing where the policy is makes it a lot easier for your family to get the process started and get the claim paid quickly.
Your family needs to know who to call when you die. The policy will direct you to call the company to start the claims process. I say that if you don’t know who the insurance agent is, call the company. Our letter of instruction included in the policy says to call me. I want to know when my clients die. I want to make sure that I don’t let my client down. I know that if I can quarterback the process, things will work more smoothly. A relationship with your insurance agent is very important. Whether you see your agent face to face each year or you talk on the phone once a year to make sure you are up to date on coverages, this relationship will make the claims process much easier.
What do I need to file a claim? Generally, a claim form and a death certificate is all that is needed. After filing the claim, the process is usually a short one. Funds are received by the beneficiary is many cases less than 7 – 10 days. If the policy is less than 2 years old, then there will usually be an investigation that can hold the claim up for a while longer.
Life insurance policy proceeds can be rather large, so make sure that your wishes are spelled out for your beneficiaries. If you would like to see the mortgage paid off, let them know. If a college fund is a concern, let them know. Life insurance is probably your last chance to show your family how much you care. Why not summarize your wishes and put them in writing? You can make it easier for your beneficiaries that way.
Life insurance companies have been around for hundreds of years. They truly want to do what is best for you and your family.
If you have any doubt about your current policy, we can review it with you. If you are just starting the process of buying life insurance, we can help with that too. You may need help determining what kind of life insurance to buy or how much life insurance you need. We have helped thousands of policyholders all across the country protect their families. You can start by getting a quote right here on our website. We are certified agents here to help you with your financial life insurance agents, dont take the advice of just anyone with a big name such as life insurance advice by Dave Ramsey or Suze Orman on Life Insurance, we are truly here to help you understand what is best for your needs and your family!
This story should be viewed as an eye opener for consumers everywhere. Life insurance industry under investigation is nothing new. Let this be an opportunity for education.
Frequently Asked Questions
How do life insurance payouts work?
When an insured dies, the beneficiary provide a certified copy of the death certificate and complete the necessary paperwork for the life insurance company. Once processed, the beneficiary will receive the death benefit.
How do you find out if you have unclaimed life insurance proceeds?
When a life insurer has unclaimed funds, they are turned over to the state where the policy was bought. Check with the state unclaimed property department.
Do you get your money back at the end of term life insurance?
You do not get your premiums back with a traditional term life insurance policy once the term ends.