Policyholders are being advised to take care when naming their beneficiaries.
Over the last while, concerns have been growing over the number of life insurance companies that are not paying off the policies to beneficiaries when the policyholders die.
The problem is that many beneficiaries don’t realize that they hold this position.
Many consumers are failing to tell their loved ones when they take out a life insurance policy or don’t tell them that they are the beneficiaries. This makes it far more challenging for the insurers to make sure that the payments are sent to the right place.
The result is that millions – or possibly billions – of dollars from life insurance policies are going unclaimed.
It is vital that people – especially the elderly – make sure that they keep their affairs in order, and informing a beneficiary about a life insurance policy is a primary element of that effort. The problem is that if the funds from a policy go unclaimed for a period of five to ten years, then they will be pooled back into a general fund for the state. This means that the money will have been paid into the policy, but the individual to whom the policyholder had intended the payments would never receive them.
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This is unfortunate, particularly in times such as the current economic downturn. Families need to insulate themselves against the financial hardships that can result from the death of a loved one. However, taking the step to purchase the policy is only the very beginning. In order for the effort to be truly effective, the beneficiaries needs to know that the money is there, and that it belongs to them.
It is believed by some that part of the problem is that life insurance policies had slumped for a while in their popularity, and that it became less commonplace to discuss them. However, these policies are becoming a regular part of a family’s financial plan once more, particularly because of the state of the economy and the lack of confidence that people have in their other forms of investments. Now, the discussion of the policies and their beneficiaries must also return, so that the coverage can provide the benefits that were intended by the policyholder.