We just learned my dad had a life insurance policy, 12 years later. Has the window closed with the insurer?
It’s not wise to remain as silent as the grave when it comes to planning your will.
While most Americans know the importance of an estate plan, only about half of us have one, and an additional 51% have not discussed their inheritance plan with their heirs.
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A survey from LegalZoom highlighted that 72% of older Americans intend to leave an inheritance, but only 48% of them have a plan in place (1). What’s worse, 39% of younger Americans report not having had conversations with relatives about financial plans, such as inheritances. This will leave a lot of heirs in the dark about the assets that will be bequeathed when their parents or close relatives die.
Take Helen, for example. Her father passed away 12 years ago, and her mother, Bridget, didn’t know he had a life insurance policy at the time. When they were going over some papers, Helen found a letter from an insurance company at the time of her father’s death, saying that they would be sending a check for his coverage. Bridget admitted she didn’t believe she received it.
While the widow is apparently owed the money, a call to the insurance company revealed it’s too late to claim it. Helen wonders if they have any other recourse to claim the payment that her father intended them to receive.
Here’s what you need to know about unclaimed life insurance policy payouts, and how you can avoid a similar situation by communicating the details of your will before it’s too late.
The skinny on life insurance policies
When you buy a life insurance policy, you’re making a legal agreement with an insurance company to pay a certain amount to your beneficiaries if you die or are severely injured (2). When a policyholder dies, the beneficiary can make a claim with the insurance company, and once it's paid out, the policy ends. It’s also important to note that the policyholder must maintain the premium payments to keep the coverage in effect.
Life insurance can help cover the costs associated with the policyholder’s death, like medical bills or funeral expenses. The money can also be used for the beneficiary’s needs: their own living expenses, debts or even a large discretionary purchase.
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