Tag Archives: beneficiary

Unclaimed property – Are you a beneficiary but you don’t know it?

Over the last five years or so, a study has been conducted to determine how insurance companies ensured that beneficiaries of life insurance policies were notified that a relative with a life insurance policy had died.

The study was initiated by California Comptroller John Chiang, who used a Connecticut auditing firm to examine the payment practices of 21 life insurance companies nationwide.  The Controller’s investigation “has revealed an industry-wide practice of companies both failing to pay death benefits to the beneficiaries of life insurance policies and ignoring their legal duty to turn the money over to the State for safe keeping.  Instead, companies would draw-down the policies’ cash reserves in order to continue collecting premium payments from the deceased.  Once the cash reserves were depleted, the company would cancel the policy.  Past audits also found that insurers did not routinely cross-check the owners of dormant accounts with government databases listing the deceased.  In other cases, companies had direct knowledge of the policy owner’s death, but still did not notify the beneficiaries.”

When questionable practices were uncovered, lawsuits ensued.  The premise of one of the latest was that insurers used the Social Security Death Master File to determine whether  those insured who had living benefit riders to annuities had died and, if so, they acted promptly to stop payments.  However, the Death Master File and other means weren’t used as often to ensure that beneficiaries of life insurance policies were promptly notified that a relative with a life insurance policy had died, and the funds from that policy paid out.

In the case of one recent lawsuit, the lead plaintiff claimed that he was notified only in 2010, four years after the death of the insured, and then only by the state of Illinois Treasurer’s Office…not by the insurance company.  He received only a small sum, and it wasn’t until June 2012 that a larger sum was paid, without a good explanation.

Earlier this month (June 2013), Mr. Chiang reached a settlement on behalf of the state of California and its residents with 11 insurance companies who had been found to have underpaid life insurance benefits.  The agreements he reached required the 11 companies to do the following:

  • Restore the full value of all impacted accounts dating back to 1995;
  • Fully comply with California’s unclaimed property laws and cooperate with the Controller’s efforts to reunite these death benefits, annuity contracts and retained asset accounts with their owners or, in many cases, the owners’ heirs;
  • Pay the policy beneficiaries 3% compounded interest on the value of the held amounts from 1995, or from the date of the owner’s death, whichever is later.

If the benefits are not paid to the heirs within a specified period of time, the law requires businesses to send the list of abandoned property to the state.  In California, the period of time is three years; it varies by state.  In many states, this has become a large source of revenue.  However, the states’ first goal is to return the money to its rightful owners.

Many other states have followed California’s lead, filed suits against the major insurance companies, and will also benefit from California’s settlement with those 11 companies.

To learn more about beneficiaries and estate related topics, go to www.diesmart.com.

 

 

Have you collected the Social Security benefits to which you may be entitled?

You worked hard your whole life and paid money into the Social Security program evey month. So did your spouse. And now that you are both retired, you are relaxing, enjoying life and collecting a benefit check every month.

But Social Security benefits are not just for retirement. They are for widows and widowers, too. That’s right. Some of the money you paid into Social Security during your working life goes to survivor’s insurance from which you may one day be entitled to collect benefits. The amount of those benefits is based on lifetime earnings.

It is important to know that the surviving spouse is not the only one who can collect benefits. Surviving minor or disabled children are eligible as well.

Diesmart has received questions from widows and widowers who want to be sure they have collected all of the pension benefits to which they are entitled. However, they usually either forget or don’t know that they are leaving money on the table when they don’t file for Social Security survivor benefits as well.

Don’t forget to contact the Social Security administration to find out what steps you need to take to collect benefits to which you are entitled. www.ssa.gov/survivorplan/ifyou.htm

For more information about death benefits, go to www.diesmart.com.

Do your frequent flier miles live on after you’re gone?

The New York Times recently did research to find out and the answer was far from consistent.

Only two airlines contacted have a specific, written policy that allows your miles to be transferred to a surviving family member – American and US Air. On the American Airlines site, in the section titled “Earning AAdvantage Miles”, they outline their specific policy. US Air states their policy under General Terms and Conditions.

One airline, JetBlue, said that they don’t have a specific policy but, after receiving a death certificate and other documentation, will transfer the miles to a beneficiary.

Southwest Airlines has a specific policy – it does not allow transfer of any miles after the death of a RapidRewards member.

Delta’s policy is to not transfer miles. However, upon request of a SkyMiles member’s surviving family member, they may make an exception and move the miles to their account.

United also said their policy is that miles are not transferable upon death. However, MileagePlus evidently has a form that can be completed to request transfer of miles from a deceased member’s account to that of a beneficiary. Along with the completed form, a copy of the death certificate and a $75 fee must be submitted.

If you have a lot of unused frequent flier miles, you might want to specifically bequeath them in your will. However, the airline holding them is still not legally required to give them to the beneficiary of it is against their company policy.

What’s the easiest thing to do? Make sure your frequent flier miles are on an airline that will allow your family to inherit them or start travelling more now, using up that bank of valuable miles while you can.

For more information about what happens to your assets when you’re no longer around, go to www.diesmart.com.

Is planning your own funeral a good idea?

You may not know when you’re going to die, but you know for sure it will happen.

A little advance planning of your own funeral — or that of a loved one — can make that traumatic time when you die a little easier on your loved ones.

Pre-planning funerals is getting more common as many people prefer to decide on the details of the last celebration of their life themselves. If you decide to do this, talk to your parent or spouse or other family and friends about your funeral wishes at an appropriate time, probably not during an argument or over a holiday dinner. Tell your adult children what you’re thinking about.

Here are some things to consider:

1. Are you thinking about a standard viewing and funeral?
2. Do you have a cemetery plot?
3. Would you prefer cremation?
4. Do you have enough money to pay for big event?
5. Do you want your death notice to read like a biography or will you be satisfied with a published statement of your dates of birth and death?
6. Do you want a video or slide show to be shown during visitation hours? Or do you want a photo board to help mourners remember earlier times?
7. Do you want masses of flowers or would prefer that money be donated to a charity instead?
8. Is there something special you want at your funeral – like your grand piano or motorcycle?

All of the above comes at a cost. A funeral varies depending on the services provided. Cremations generally cost about $4,000. A burial the day after a viewing can be as much as $10,000. The cost of cemetery plots today begins at about $900, but can be several thousand dollars in a major metropolitan area. And you can spend $8,000 or more on a casket.

If you decide on cremation, your ashes can be placed in an urn and then in a mausoleum, or stored or disposed of however you wish.

Whatever you decide to do, if you preplan and let your loved ones know your wishes, you know that your last celebration of life will be the way you want it to be.

For more information about funeral planning, go to www.diesmart.com.

Does a loan live on after death?

Although the person is dead, the loan may live on for years…or until it’s paid off. In some instances, death cancels the loan but this is rare. In some states, the next of kin doesn’t just inherit the estate. He inherits the debt as well and is required to pay the debt.

If someone cosigned the loan with the deceased, that person is responsible for the debt. Some loans, such as federal student loans, contain a clause that cancels the loan in the event of the death of the person who signed it.

Private lenders vary on their policies so heirs will have to check the note carefully to find out whether their liable for the debt.

If the loan has been secured with real property, it must always be repaid. Either the bank will repossess the property to cover payment or whoever has inherited that real property will have to pay off the note.

Sometimes banks or other financial institutions will give the cosigner or other family member a few months to decide how to pay off the loan so it’s important to speak with a financial officer quickly so a solution can be discussed.

If the original borrower purchased credit life insurance which pays off the loan in the event of death, there is no problem. The heirs get to keep their inherited property and the loan is paid.

Be sure you know the terms of any loan you take out and what the impact of this loan may be on your heirs if you die before it’s been paid off. Otherwise, you may be leaving your heirs with an unwelcome inheritance – a debt.