Obtaining desired life insurance to care for the estate, the heirs and the financial protection considerations of relatives has long been a major objective advocated by the financial planning experts. Yet, rarely is much attention to ensure that recipients actually receive their death benefits law. And if this is your life is involved, of course, you will not be around to check how things were.
The hypothesis that life insurance payments will always be proceed as expected is interrogated throughout in expansion of investigations of the State, centered primarily in Florida and California. The two States called the hearings to explore the practices of life insurer in the payment of death benefits. Several companies were called for the moment to participate, including MetLife and Financial Services of the country. John Hancock, a unit of Manulife Financial, has already signed a settlement agreement concerning its practices.
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Both States are part of a more broad, 35-State group met to consider whether States are Miss unclaimed life insurance payments possible revenues. As indicated in the Wall Street Journal, recession pressure on the finances of the State prompted for new sources of income.
The proceeds of life insurance policies can be obtained by the States that if the benefits of this policy are not claimed for several years. In some cases, States allege, life insurers fell in their efforts to locate the beneficiaries and dragged the feet to inform States of unclaimed policies.
California tested practices and life insurers 21 and said that he found a pattern of troubling behavior. According to a recent statement by the Office of the Comptroller of State John Chiang:
"The audit revealed a practice of the entire industry of companies do not pay death benefits to the beneficiaries of life insurance." Instead, companies would draw-down reserves of policies to continue the collection of payments of premiums for the victim. Once the cash reserves were depleted, the company would cancel the policy. The audit also found that insurers did not systematically cross-check the owners of dormant accounts with databases governmental listing of the victim. In other cases, the company had direct knowledge of the death of the owner of a policy, but still not notified recipients. ?
Hancock concluded a settlement agreement with 23 of the 35 States, including California, which it agreed to expand efforts to resolve the issues of unclaimed property. However, he said it was "scandalised" by the controller of California "unfounded allegations and characterizations", said the statement from the Office of the controller "violation of the same agreement it negotiated and signed with John Hancock."
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MetLife and Nationwide have defended their practices while committing to cooperate with the investigators of the State. While the extent of unclaimed policies has not been publicly documented, investigations have stressed the need for life insurance subscribers to take action to avoid problems of payment of claims for death.
In particular, consumers should be aware that the legal obligation to initiate an insurance-life-death payment benefit rests with the beneficiaries of the policy, not insurance companies. Companies can, to varying degrees, make efforts to communicate with the beneficiaries. But there may be no contractual obligation to do so.
Make sure that your life insurance benefits are paid according to your wishes, experts suggest several basic precautions:
1. Beneficiaries. Make sure that your beneficiary choice is clearly identified in your policy, including their names, addresses and social security numbers. Recipient details regularly review and update their contact information and the beneficiaries needs. This should include primary and potential beneficiaries.
2 Records. Keep multiple copies of your records of life in different places. Consider an online storage site for digital copies of all your folders key financial. You can pay a company to back-up to provide this service or do it yourself, using Google or another site of storage free "cloud". (Note: Experts warn that policies should not be honoured in Vault, because boxes are systematically sealed death and may not be accessible for some time.)
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3 Communications. If you died tomorrow, your beneficiaries would have the information necessary to submit claims of life insurance? Chances are, they shouldn't. We are comfortable with the discussions related to death and planning. Overcome the discomfort. Send the details of the policy. Review of password access to your digital files. Think how much your family and heirs would appreciate your help to be able to perform what are, after all, your wishes.
4. Next steps. If you have a financial planner, personal counsel or even a life insurance agent, to help ensure your beneficiaries can quickly file the claims on your life insurance. If you do not have a third party to help, consider sending information "next step" directly to your recipients. Where that they can obtain copies of your certificate of death? What are the addresses of the insurance company to which the certificate (certified copy is required) and the policy of claims must be submitted?
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