Category: Policy Review

Life insurance carriers will probably in the future be more proactive in paying death claims because right now their feet are to the fire. State regulars are banding together to investigate carrier past practices with the National Association of Insurance Carriers is becoming involved.

States are doing this to collect money on unclaimed death claims.   Policyholders should take the necessary steps to avoid any delay in their life insurance going unpaid for any unnecessary length of time.  Here are a few suggestions:

Contact your life insurance carrier and verify your contact information, and especially the contact information of your primary and contingent beneficiaries.  If you need to make any changes to your primary or contingent beneficiaries, request from the carrier the appropriate change form, fill it out and send it back.

Contact your beneficiaries or executor and make sure they know the names and contact numbers of your life insurance carriers.  Make sure they know that they will have to file a death claim with the carrier when you pass away.

Contact your life insurance agent and make sure your agent has all the correct beneficiary name and address information.  Your agent can play a crucial role in making sure your policy will remain in force for the rest of your life.  If it is a term policy, when does the level term period end?   What are your conversion options?   If it is permanent life insurance, whole or universal life, review your annual statement.  What are the guaranteed and non guaranteed cash value projections?  Since annual statements are often incomplete, request from the carrier an in force illustration.   You can save your policy from lapsing or save yourself thousands of dollars in premium if you know how the policy is projecting and how to manage your cash value.

If you no longer have an agent, you may request to an agent to become your agent of record.

 

How is your life insurance carrier going to know you’ve died?    Carriers traditionally require the beneficiaries to notify them.   But what if your beneficiaries don’t know you have a policy or have died themselves, and your life insurance agent no longer is in touch with you?    Some light was shed on this problem when last Friday John Hancock  agreed to settle with the state of California over unpaid death claims.   If a policy becomes on orphan, the final resting place of the orphanage is your residence state.  The carrier sooner or later has to transfer that money over to the state as unclaimed property, and states right now can certainly use interest on that money, so that end is tightening up.   That’s a break for consumers because carriers will be more proactive in checking if their clients are alive or dead.   But it should never come to that.

Just think of it.  All that money sitting around waiting to be claimed.  (Check by residence state) What a waste. Let your beneficiaries know you have a life insurance policy and the carrier’s name.  Place your policy with your will and other vital papers in a place where they can be easily identified and retrieved.

Also have another layer of protection, don’t be an orphan policy holder.   If your life insurance agent is no longer in the business, you have an orphan policy.  That’s not a good idea, agents are more than helping you buy a policy.  They should be monitoring your policy as well.  They can help you save thousands of dollars in premiums or increase your death benefit.   If your agent is not contacting you, for whatever reason, establish a new agent of record.   This is especially crucial if you have a cash value life insurance policy, and you receive an annual statement.

You should have a  life insurance agent contact you annually to review your coverage.

• Trade up.  You can potentially save thousands of dollars or increase your benefit by replacing your coverage.  If your in your 60’s or 70’s and still fairly healthly, might be time to trade in the old UL for a better performer.  Cash value can be transfered from you old policy into a new one and dramatically improve your situation.

Continue reading “The Danger of being a policyholder without an agent” →

A recent New York Times article discusses unclaimed life insurance.  When a life insurance policy owner passes away and the carrier cannot locate the beneficiary, then the money stays with the carrier and eventually goes to the state, where it sits as unclaimed property.

There are many ways to avoid this.  I’ll discuss the role of a life insurance agent.  Policy holders had a agent when purchasing coverage.  A good agent will keep tract of you  periodically, update your contact information and conducting policy reviews. If you’ve lost tract of your agent, you may select a new one to be your agent of record.    This may save you thousands of dollars if you own a permanent life insurance policy, any cash value policy, either whole life or universal life,  that you receive an annual statement.   Cash value in your policy can be used to pay premium.  This may be an extremely effective money saving strategy towards the end of your life.    With term life insurance, an agent can inform you of your conversion options, which allows you to convert your term to permanent life insurance without medical evaluation.   Conversion makes health problems not an obstacle to continuing coverage.   You are given the same health rate as when you took out the policy.  Conversion options expire often before the term policy ends.  Do not assume you can take care of this at some later date.

Please contact me if you’ve lost tract of your life agent.