Not Paid in Northern California
Last night 60 Minutes aired an episode called “Not Paid”. It turns out that insurance companies will not pay out to beneficiaries unless the beneficiary knows about the policy and files a claim to receive those benefits. Billions of dollars have been kept by the Insurance companies even when they know the policies are paid in full and the policy holder has died. Several States have initiated lawsuits to recover these funds and get them to the beneficiaries that have been snubbed. Most of the cases have been settled with the beneficiaries being paid the amount that they would have received at the time. Unfortunately, the damage has already been done because the proceeds are most needed right after death replacing the valuable income that was lost when the policy holder died. To add insult to injury, the insurance companies held on to the proceeds gaining investment interest on the cash and watched the policy holder’s money double and triple in size. Does the beneficiary see this gain on investment? Nope…. stays with the insurance company and will not be a part of the pay out when and if the policy ever pays the beneficiary.
The first thing I did this morning was call my Life Insurance Company and ask how my Insurance proceeds would be paid if I were to die, my wife died or my son. The company followed suit just like in the 60 Minutes episode and stated that a beneficiary would have to make a claim. That means that if my wife and I die my 13 year old son will have to make a claim or his guardian would have to make a claim to get the proceeds from the policy.
So okay this really sucks so how do I protect myself and make sure that my policy gets paid to my beneficiary?
Add the policy to your revocable living trust. The Trust will identify the policy namely your policy number which will allow either the Beneficiary or the guardian of a minor to make a claim and get the beneficiary paid.
So what if I think there is a policy out there and I am the beneficiary and I don’t have the policy?
First place to look are tax records if available. There is also a company that will search Insurance company databases called MIB Group for a fee. If it has been longer than a year the funds may have been claimed by the State and you can contact them at NAUPA National Association of Unclaimed Property Administrators.
If you would like to watch the video and read comments it can be viewed at 60 Minutes.