Life insurance death benefits?

Question

Why aren't there better federal laws and/or state laws to "force" insurance companies to do more to get the death benefits paid to beneficiaries?

Example: Hard working couple, husband has life insurance policy for the wife and kids future, both not very structure and organized with the documentation and finances. Wife doesn't know there is a policy, husband dies, she doesn't know where to start to find the policy. There are thousands of insurance companies in US.

Shouldn't there be tougher laws to make it more easier for the widow in this example?

Answer 1

A life insurance policy is like the BIBLE of life insurance.  To not be able to find it is a sin.  However, c**p happens and it does seem that SOMEONE should know what to do.  The fact that nobody can do anything is crazy and she should try and find that policy even if it takes weeks.  She is now responsable for getting it.  But it doesnt makes sense because she is the beneficiary.  If you do that kind of thing for a son that is married in another state then what is he to do when his father passes?  Good question.  In the whole, i think that the responsibility is in the insurance co.  but that the logic part of it all should have been with the owner and beneficiary.  How could he TRUST that the insurance co.  would seek her out to give her a lot of money!?!

Answer 2

For all anyone knows, the wife wasn't the beneficiary anyway.  The husband may have told the beneficiary where the policy is and it is already cashed in.  Life insurance is a PRIVATE transaction, and the only people who know the details of the contract are the owner, the agent or broker, and the insurance company.

The executor of the estate has the power to check banking records, Medical Information Bureau records, and contact his advisors to inquire about the policy.  This person may or may not be the spouse.  If the executor is the spouse, she should be able to find the policy if it exists.

Edit: To prevent this from happening, write down important account information and advisor contacts to share with your loved one, including at least one person not in your household (attorney, adult child, church member, etc).  I know of one attorney who calls this a "love letter".  In other words, if something dramatic happens, you care enough about these folks to make finding documents easy.

Answer 3

A good and valid point.  However, the state - insurance is not a federaly regulated industry - would agree that it really the client / customer, or widow's responsibility to inform the company of a claim.  Most states' Dept of Insurance are too understaffed and lack the resources for any additional regulation.  Their primary concern is however, protection of the public from any wrong-doing.

Think of it in referrence to filing a claim when you have had an automobile accident.  Unless the company is told, they have no way on knowing that someone needs to be paid.

An idea:  having a safety depost box, of which to place insurance documents (and other vital paperwork).  This way, nothing would be lost and records would be all in one place to be accessed when needed.

Hope this helps, a bit.

Answer 4

looking through the bank records would be a good indication of any possible insurance policy.   but, the husband may be insured under an insurance policy that is paid through his employer and therefore would probably not be paying premiums.   whomever is paying the premiums would know about a policy and could contact the insurance company.  if the policy is destroyed or lost, the claim can still be made and paid.  usually the insurance company will have the beneficiary or executor/administrator sign a lost policy affidavit.  if someone feels that there is a life insurance policy and cannot determine what company issued it, you should be able to contact the state's department of insurance and they could maybe provide the person with a list of insurance companies for that state.  you would then just have to contact each one to find if that company issued a policy on that particular person.

if the owner dies while the coverage is still inforce, the insurance company is contractually obligated to pay the claim.  an insurance policy is a legally binding contract and both the insurance company and insured/owner must adhere to the terms of the contract/policy.  

additionally, insurance companies do have a way of locating people using their ssn and date of birth.  the system that they use can also determine if the person is still alive or not.

Answer 5

The problem doesn't sound like it is with the ins. co., it sounds like it is with the wife.  If the husband and wife were close, she would know if there was a policy.  

She would have to go over all the bills or wait for new ones to come in to determine if he did business with any insurance company's.  Otherwise, she might inquire at her husbands employer.

There are plenty of tough laws that regulate the insurance industry, but there are no laws to regulate an unorganized household.

Answer 6

You want the govt to pass laws making it illegal for husband and wife not to talk to each other?????

Answer 7

WRONG, WRONG, WRONG!

A law? No way! You answered your own question, keep good records. Insurance companies don't even know someone has died unless notified. It's really up to the family to hunt down policies. I had to do it. It's not fun but putting blame and responsibility on the insurance company is not appropriate.

Answer 8

My suggestion to this hypothetical wife is to go back through the last six months of check registers when her husband was alive. In there, she should find at minimum the company's name. It is all down hill from there.

Answer 9

No, the individuals bear the responsibility for being more "structured and organized."  I can't imagine being dumb enough not to have records of your life insurance available for your next of kin.