After a policyholder's death, the proceeds of a life insurance policy may go unused.
Regardless of the circumstances, this is an awful dilemma, especially nowadays, when many
individuals are struggling to make ends meet. In addition, this is a result that can be
readily avoided.
1.A misunderstanding has developed between the insurer and the
policyholder.
Most communication between you and investment firms like banks and credit card firms is done
by "snail" mail (e.g., letters). You must share your new physical address with someone with
whom you'd like to stay in touch following your relocation.
If you relocate, notify all of your financial institutions, including your life insurance
company, promptly of your new postal address. All forms of communication, including email,
must be reported to your life insurance provider if you change any of your contact
information (including your cell number).
2. It's possible that the insurer doesn't know that the insured has died.
When a policyholder dies, life insurance companies normally don't know about it until they
are notified by the policy's beneficiary. As long as premiums are being paid, there is no
reason for an insurance company to presume the covered person has died.
As a result, many insurances are at a stage where no premiums are required. It's possible
that the insured goes on to live after the payments have finished on some types of life
insurance because the premiums are paid upfront or in tiny amounts (including such 10 or 20
payments per year). As a result, the insurer would cease sending premium notices once all
payments had been made.
If an employee covered by group life insurance passes away, the employer must notify the
insurer. Do not forget to give your loved ones your life insurance company's name and
contact information, for them to record your death and make a claim.
3. There are no known beneficiaries of the life insurance policy.
This scenario could have either one of two issues. For starters, if the beneficiaries'
descriptions aren't specific enough, the life insurance firm might not be able to find them.
For an instance, if the recipient's name reads "My Wife" or "My Children," but does not name
them or include their SSN or current residence, this could be the case.
Ensure that any life insurer from which you have life insurance coverage can readily
discover and authenticate the identity of each beneficiary by providing a detailed username
and password.
Additionally, even if the corporation is aware of the intended beneficiary, it may be
difficult to locate them given the passage of time, especially if the insurance was
purchased years or even decades ago. If you're a beneficiary, please remember that until the
person dies, the life insurance company can't even respond to your request as to whether or
not you are a beneficiary.
4. It's common for people to be unaware that they're beneficiaries of a life
insurance policy.
Benefits may go unfulfilled if nobody recognised they could submit a claim since the insured
withheld this information from the recipients for several reasons.
Inform the recipients of your insurance plans (individual and group) that they will be
eligible for life insurance in the event of your demise. And don't forget to include the
firm name and address, and the registration number, in your correspondence.
5. The firm is no longer in existence or has changed names.
Changing the name of both the insurance firms that sold the initial policy may make it
increasingly challenging for the recipient to contact them and file a claim. Some people
would not know when or even how to find the new insurance company, leaving the deceased's
benefits unclaimed. In most cases, an insurer will tell its policyholders if it changes its
name or location.
To find things simpler for your dependents to file a claim, keep records of any
notifications concerning modifications to the names, addresses, or telephone numbers of your
insurer.
