• Home
  • E-Booklets
  • Pay Less Tax
  • Privacy Policy
  • Cheatsheets
  • Contact Us
  • About us

Retirement Income

New Ways to Get More Retirement Income

  • Retirement Advisors
  • Retirement Insurance
  • Retirement Investing
  • Retirement Living
  • Retirement Planning

A Lost Insurance Policy With You As Beneficiary – What Happens?

Posted on April 3, 2011 by bobrichards

Suppose you were told long ago that you were the beneficiary of a relative's life insurance policy or more commonly, you are the beneficiary of a parent's policy. The insured dies but you cannot find the policy. Let's suppose further that you do not know what insurance company wrote the policy. What happens until you find it and you collect as beneficiary? Or what if you never knew you were the beneficiary?

In the case where you know of the policy,to collect, you will need to notify the insurance company and deliver the policy owner's death certificate to them. What happens to the policy in the mean time?

If the insured dies and the insurance company is not notified, it will take steps to find out why a policyholder stopped making payments. However, there is a problem if the policy was paid up and no premium payments were being made. In the case of expected payments and non-receipt, the insurer will send out letters to the insured informing him that the policy may lapse as a result of unpaid premiums. If the company gets no response, they will lapse the policy.

So, without notification the type of policy determines what lapsing implies:

Term Life policy – You will be able to collect if you can prove that the owner died before the end of the term, and that he had paid all his premiums. If he died after that term expired, then there is nothing to collect.

Permanent Life policy – You will receive the money (with interest since date of death) if the death occurred while all premium payments were made up until the time of death.

However, if the insured stopped making premium payments before he died and therefore 'lapsed' the policy, then there is a chance that you might not receive anything, if too much time passes until notified. That is because when a permanent life insurance policy lapses, most insurance companies switch its status from permanent insurance to either of these two options:

  • Extended term: where the company uses the cash value of the policy to buy a term life insurance policy for the same death benefit, using the cash value of the policy. The death benefit will continue for the longest period the cash value will purchase. Then there is no benefit beyond this term -0 in other words, the policy runs out.
  • Reduced paid up: where the company will keep the policy in force permanently, but because there are no premiums coming to sustain the p;olicy, it will reduce the death benefit.

An insurance policy owner should not only maintain a good record of his policy and where it is located, but should give beneficiaries information too ... including the name and address of the insurance company that wrote the policy. Tracking down an 'unknown' insurance policy can be difficult if not impossible.

If the insurance company is not notified of the death, they have no responsibility to consult death records to see if they have policyholders who died.   So the burden to collect is always on the beneficiary as the insurer does not need to come looking for you.  Eventually, the polcyholder would reach age 100 (if the insurance company thinks he is still alive) and the policy would pay off (in most cases).  The insurance company at that point would make a more active attempt to contact the policyowner or beneficiaries.

However, there are billions of unclaimed death benefits.

Everything You Don’t Know About How to Use Life Insurance to Make Money

  • Five ways that wealthy people use life insurance to retain and create wealth
  • How to convert an existing life insurance policy into more money than the insurance company valuation
  • Why you never want to be the owner of a policy that insures you
  • A huge and common mistake when selecting a life insurance beneficiary
  • They don’t talk about these “insider” strategies on CNBC or in Money magazine. Get the free guide to open up a new horizon of financial awareness.

    You might also like:

    • How to Pay Lower Taxes on IRA Distributions
      How to Pay Lower Taxes on IRA Distributions
    • Retired and Stocks Losing Value
      Retired and Stocks Losing Value
    • When Will the Stock Market Recover
      When Will the Stock Market Recover
    • Bear Market - When Will It End?
      Bear Market - When Will It End?

    Filed Under: Estate Planning

    About bobrichards

    Bob Richards
    Editor | Involved in Various Marketing Positions within the Financial Services Industry

    Comments

    1. Kids Birthday Parties Indianapolis says

      April 5, 2012 at 2:23 am

      Interesting article. I guess I had never given the issue much thought. It goes to show how important it is to have a plan in place at an early age. I couldn't imagine if something happened to me and my wife and daughters were left penniless because they couldn't find my policy.

      Reply

    Leave a Reply Cancel reply

    Your email address will not be published. Required fields are marked *

    Second place winner best retirement blog

    SH award winner SMALL (1)

    Not Enough Savings to Retire?
    Learn Six Ways to Earn Retirement Income (from home)

    You do not need special talents, skills, computer knowledge, etc. We show you multiple ways others are working a few hours a week to generate a comfortable retirement income.

    Download Free Copy

    Latest Posts

    Recession Can Be Good for Retirees - The Silver Lining of Recession

    Recession Can Be Good for Retirees - The Silver Lining of Recession

    Bear Market - When Will It End?

    Bear Market - When Will It End?

    When Will the Stock Market Recover

    When Will the Stock Market Recover

    How to Pay Lower Taxes on IRA Distributions

    How to Pay Lower Taxes on IRA Distributions

    Retired and Stocks Losing Value

    Retired and Stocks Losing Value

    Categories

    • 401K IRA Roth Withdrawals, Distributions, and Rollovers
    • Annuities for Income
    • Estate Planning
    • Retirement Advisors
    • Retirement Insurance
    • Retirement Investing
    • Retirement Living
    • Retirement Planning
    • Social Security
    • Supplemental Retirement Income
    • Tax Savings
    • Alternative Investments
    • E-Booklets
    • Pay Less Tax
    • Privacy Policy
    • Cheatsheets
    • Contact Us
    • Subscribe
    • Sitemap

    Recent Posts

    • Recession Can Be Good for Retirees - The Silver Lining of Recession
    • Bear Market - When Will It End?
    • When Will the Stock Market Recover
    • How to Pay Lower Taxes on IRA Distributions
    • Retired and Stocks Losing Value

    The Retirement Income Blog

    25A Crescent Drive #1508
    Pleasant Hill CA 94523
    T: 844-887-4131
    E: [email protected]

    © 2018 Retirement Income