It’s not okay to be silent as the grave when it comes to planning your will.
While most Americans understand the importance of an estate plan, only half of us have one, and an additional 51% have not discussed their inheritance plan with their heirs.
A LegalZoom survey revealed that 72% of older Americans intend to leave an inheritance, but only 48% have a plan (1). What’s worse, 39% of young Americans report not discussing financial plans, such as inheritance, with relatives. This will leave many heirs in the dark about the assets that will be bequeathed upon the death of a parent or close relative.
Take Helen for example. Her father died 12 years ago, and her mother, Bridget, didn’t know he had a life insurance policy at the time. While they were looking for some papers, Helen found a letter from the insurance company when her father died, saying they would send a check to cover him. Bridget admitted she couldn’t believe she got it.
While the widow apparently owes the money, the insurance company is called too late to file a claim. Helen wonders if there is any other way for them to claim the payment that their father intends them to receive.
Here’s what you need to know about unclaimed life insurance policy payments, and how you can avoid the same situation by communicating your preferred details before it’s too late.
When you buy a life insurance policy, you make a legal agreement with the insurance company to pay your beneficiaries a certain amount if you die or are seriously injured (2). When a policyholder dies, the beneficiary can file a claim with the insurance company, and once the payment is made, the policy expires. It is also important to note that the policyholder must maintain premium payments to maintain coverage.
Life insurance can help cover expenses related to the policyholder’s death, such as medical bills or funeral expenses. The money can also be used for the beneficiary’s needs: their living expenses, loans or even a major optional purchase.
According to data from Western and Southern Financial Group (3), approximately 51% of adults have some type of life insurance policy. Most have an individual plan (55%), while the remaining policyholders have employer-provided coverage or a combination of the two.
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If, like Helen and her mother, you have not made a life insurance claim for which you are eligible, the good news is that there is no deadline for making a claim (4). If you’re not sure if you’re covered or don’t know which insurance company your loved one has a policy with, you can check with the National Association of Unclaimed Property Managers, which has resources for each state where you can look up your unclaimed policy amount (5). The National Association of Insurance Commissioners also has a policy locator service that you can use to search for any policies that your loved ones may have had (6).
If Helen and her mother are unable to find the information, they can open a new claim with her father’s insurer by following these steps:
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Find policy information, either through documentation or by requesting insurance.
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Collect the necessary documents to fill the insurance claim form.
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Choose a lump sum or annuity option for the policy.
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Then submit the claim. There may be a delay while the insurer investigates, but they should follow up as needed.
It is important to prepare your loved ones for the end of their lives. This includes discussing your will, the division of your property and any insurance that family members will benefit from. While these conversations may be uncomfortable, focus on planning as a kindness to your loved ones, helping 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 facilitate the conversation, making sure you’re making the right decisions for your family.
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We rely only on verified sources and reliable third-party reporting. For details, see our Institutional Ethics and Guidelines.
Legal Groom (1); Forbes (2); West and South (3); advanced (4); National Association of Undisclosed Property Managers (5); POLICY LOATER SERVICE (6).
This article provides information only and should not be used as advice. It is provided without warranty of any kind.
