Tag Archives: life insurance

Have you made these 5 life insurance mistakes?

life insuranceWe came across an interesting article about life insurance on the Edward Jones web site.  It gives you some valuable information and some things to think about.  It’s reposted here in its entirety.

“If you already have life insurance, you’ve taken an important step to ensure your family is taken care of in case of an unexpected event. But just having it isn’t always enough. Do you have the right type or amount? Have you reviewed your policy lately?

These are the 5 most common life insurance mistakes people make.

1.  Having the wrong amount of coverage

Studies show that 1 in 4 people feel they need more life insurance protection.* So how do you decide how much is enough? Use our life insurance needs calculator, or “L-I-F-E,” to get a quick estimate. It will help you calculate your:

    • Liabilities (mortgage, car loans, student loans, other debt)
    • Income replacement – how much your family will need for ongoing living expenses and savings needs
    • Final expenses
    • Education expenses for your children or children

Once you have that number, compare it to your current policy amount and see how close you are.

2. Having the wrong type of policy (term vs. permanent)
Do you need insurance to cover you while you have a mortgage to pay or children at home? Or are you looking to build cash value in a policy that you can later pass on to your heirs? Each insurance type has its own advantages. Here are the basic differences:

Term insurance covers you for a specific time frame, typically less than 20 years. It’s the most basic, and affordable, type of insurance, which makes it a popular choice for young families who are balancing debt and saving for the future.

Permanent Insurance provides lifetime coverage and allows you to build cash value that you can later pass on to your beneficiaries. It’s more expensive than term insurance, but the premiums typically don’t increase with age.

Learn more about the differences between these two insurance types here.

3.  Relying solely on employer-provided insurance

Life insurance coverage provided by your employer might be okay if you’re single and without kids, but if you have dependents and large financial obligations, it may not be enough. Employer policies rarely cover more than 3 times an annual salary (the general recommendation is 10 times your annual salary) and sometimes only cover as little as 6 months’ salary. Plus, if you change jobs, you can’t take your policy with you.

4.  Neglecting to designate beneficiaries

Naming beneficiaries helps ensure that your insurance money goes directly to the people you intended, helping them avoid probate (the legal process of distributing your estate). This could save your family time and expense. If you have insurance from Edward Jones, your financial advisor can help you set up beneficiaries for your policy.

5.  Ignoring your policies

Life insurance is an important part of your overall financial plan and should be reviewed at the very least every 3-5 years. If you’ve recently gotten married, divorced or welcomed a new baby in the home, it’s time to review your policy to ensure your coverage amount and policy type still work for your situation.”

For information about financial and estate planning, check out our website www.diesmart.com.

Are you missing out on unclaimed billions?

insuranceHave you told your family if you have a life insurance policy?  Do they know where to find the paperwork needed to claim its benefits after you die?

Many people take out a policy, stick the paperwork in a drawer somewhere and then forget about it.  They don’t tell anyone the policy exists or who the beneficiaries are.  When they die, their policy goes unclaimed.

The amount of unclaimed benefits is enormous – $7.4 billion in this country alone.  According to the Florida Office of Insurance regulation, that’s the amount major life insurance companies have agreed to pay out, but haven’t.

Of that amount, $5 billion will go directly to beneficiaries they find; the balance will go to states whose unclaimed property departments will search for and pay beneficiaries.

Florida began investigating the life insurance industry in 2009 and there are now 41 states involved in the effort.  It was concluded that insurers weren’t doing enough to pay out on life insurance policies where insured people had died but the beneficiaries hadn’t filed claims.

The life insurance companies weren’t quick to pay out benefits but they were very quick to stop making payments when annuity owners died.  They used the Social Security Administration’s Death Master File to identify customers who had been collecting annuity payments and immediately stopped sending money to them but did not use the same file to identify life insurance policy holders who had died and whose beneficiaries should have received benefits.

To date, 25 life insurance companies have made settlement agreements and others are still being investigated.

The industry now supports a national standard that requires life insurers to use new technologies to identify policy holders who have died and their beneficiaries who have not yet filed claims.  Twenty states have enacted laws based on this standard.

Granted, insurance companies have paid out $600 billion to beneficiaries who have filed claims in the past ten years.  However, $7.4 billion is not just pocket change.

How can you find out whether you’re a beneficiary of a forgotten or unknown life insurance policy.?  In addition to checking thru the deceased’s records and storage areas, here are a few things you can try:

  1. Check bank statements of the deceased to see whether any payments were made to life insurance companies.
  2. Look through tax returns to see whether any interest income from life insurers was reported.
  3. Go through address books for names of insurance agents or financial advisors; contact them to see whether they have any information about policies that were taken out.
  4. Check with former employers and professional organizations to see whether they had issued any policies.
  5. Search the MIB Group, Inc. database.  They provide a data sharing service for life and health insurance companies and offer a policy locator service for consumers.  For a cost of $75, they will search for policies taken out since 1996 from one of their 420 U.S. and Canadian member companies.
  6. Check state unclaimed property offices.  You can also conduct a multi-state search on MissingMoney.com.

The best thing to do is to avoid this problem in the first place and tell your beneficiaries or, at the very least, your attorney or the person who will be your executor that you have taken out a life insurance policy.  Don’t let the insurance companies keep money that should be in your family’s hands.

For more information about estate planning and end of life issues, go to www.diesmart.com.

Don’t let your ex-spouse get your life insurance proceeds

Jackie and Warren Hillman

Jackie & Warren Hillman

When you buy a life insurance policy, you name a beneficiary who will inherit the proceeds when you die.  It’s important to keep that beneficiary designation up to date or the wrong person may benefit.

One such case that went all the way to the Supreme Court was that of Warren Hillman. Hillman died in 2008 shortly after he was diagnosed with leukemia. He was 66. He had been married three times. When he died, his assets included a life insurance policy worth $124,558.03.

But Hillman made an all too common estate planning error. In 1996, while he was working for the federal government, he took out a life insurance policy and named his second wife, Judy Maretta, as his beneficiary. When he and Maretta divorced in 1998, he didn’t change the beneficiary designation on his policy. It was a policy that was part of a life insurance program for all federal employees and the law for that program says that the proceeds on death are paid according to the beneficiary designation.

He married Jacqueline Hillman in 2002 and was with her until he died.

Since his death, his second ex-wife, Judy Maretta, and his widow had been fighting over that money. In June, 2013, the U.S. Supreme Court found that Maretta was entitled to all of it because she was still listed as the beneficiary.

If your life circumstances change, be sure to update the beneficiary forms for any policies that you have. Otherwise, your ex-spouse may get your life insurance proceeds.

For further information about beneficiaries, go to www.diesmart.com.




Is there an unclaimed life insurance policy in your future?

I came across an old article in the New York Times about this topic and thought it worth reviewing. 

When someone who purchased a life insurance policy dies, the amount due to the beneficiary is set aside and the insurance company waits to be contacted by that person.  After a period of time from two to seven years (it varies by state) has passed with no one coming forward, the money is turned over to the unclaimed property division of the state in which the person died. 

Since many people do not know whether a family member who died purchased a life insurance policy in their name, hundreds of millions of dollars go unclaimed.  In fact, New York alone, in the period 2000 to a few years ago, received more than $400 million in unclaimed life insurance property and only paid out about $64 million.  That means the bulk of that property remains unclaimed and probably will never be claimed.

If a family member has died and you think he or she might have had a life insurance policy, the first thing to do is to check for any payment receipts or check stubs so you can identify the name of the insurance company.  Contact that company, ask what their procedure is for filing a claim and then follow their instructions. 

If a great deal of time has lapsed, two good places to start are unclaimed.org and MissingMoney.com.  If they have no record of any funds, check the website for the unclaimed property department of the state in which the person died. 

Don’t leave your money in the state’s coffers.  Claim the funds due to you today.

For information about estate planning and other relevant topics, go to www.diesmart.com.