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Although some people leave records behind in a superbly organized “in case of my demise” file, it’s not unusual for other people to pass away without letting relatives find out about the presence of a life insurance policy. When someone’s term life insurance is lost or goes unclaimed, tracking it down may take some detective work. But it may be worth your time and effort to find out if a family member left you something besides memories.
A lot of ‘lost’ life insurance
It’s not at all easy to track down life insurance coverage policies or benefits paid as there’s no “central registry” of most life insurance in force or paid out. But these will be the steps
(1) have the deceased’s cancelled checks to see if she or he was paying any insurance premuims, and if so, contact the insurance company or agency the payments were designed to.
(2) proceed through his or her papers to find out if there were any records of term life insurance with other companies, and contact them; regardless if s/he had stopped paying premium years ago there may have been “paid up” benefits.
(3) Contact his / her employer, and any employer he or she had retired from. Very often employers provide or offer “group” or voluntary life insurance policies.
(4) Contact associations he or she was a member of to determine if it provided any life insurance to members as an advantage, or sponsored any plans he or she might have purchased — the corporation will likely refer you to the carrier or broker involved.
(5) In the event the father’s death was on account of an accident, there may be additional benefits through membership in organizations like the Auto Club, or as an accidental death benefit if, for instance, the death was on an airplane crash additionally the deceased bought the tickets on a credit card providing such insurance. In addition, some organizations offer members life insurance coverage or a far more affordable (and useful — unless the circumstances fit — coverage referred to as AD&D or Accidental Death and Dismemberment insurance.
(6) There is also something referred to as Credit life insurance coverage, and if a person buys that as an add on to bank cards or any other financings, such as for instance auto loans, it would likely provide life insurance coverage no matter reason behind death.
(7) You may would like to try to make contact with the Medical Information Bureau (MIB Group, Inc.) It is an association of over 95% of US and Canadian life and health insurance companies that is located in Massachusetts — its website is http://www.mib.com — that for the past 100 years has receives an archive of applications for insurance that were made, and inquiries received by member companies. It maintains records of such applications for 7 years. Perhaps the executor for the estate could possibly learn if there was clearly any application filed with an associate company for the reason that period.
Finding a Policy
The actual trick could be discovering whether a dead relative has an insurance policy with unclaimed funds inside it. Should they died without a will, you will see no indication, and even people who die with wills will often forget some of their assets.
One possible method to determine the existence of an insurance plan is always to consider the man or woman’s bank statements to find out if regular payments were made to an insurance policy. If you truly believe that a policy existed, try contacting the person’s previous employers, if they’re still running a business, to see if there were any records of deductions, even though this might be a decidedly long shot when it comes to the elderly.
In accordance with a recent study by Consumer Reports, 1 out of every 600 people is the beneficiary of an unclaimed life insurance coverage, with an average advantage of $2,000. Jeff Blyskal, Consumer Reports senior editor plus the composer of the study, says a minimum of $1 billion worth of lost or forgotten insurance coverages are looking forward to anyone to claim them.
Life insurers, who given out $62 billion in benefits in 2011, make efforts to obtain the rightful owners of unclaimed insurance proceeds, says Whit Cornman, a spokesman for any American Council of Life Insurers in Washington, D.C.
So, do you believe there could be an insurance windfall on the market along with your name about it? Be equipped for some work. And remember that insurance providers will provide information only to folks who can prove these are the beneficiaries, says Steven Weisbart, senior vice president and chief economist in the Insurance Information Institute, a brand-new York-based trade group.
“If an insurance coverage company won’t keep in touch with you, that is an indication that you’re not entitled to the insurance benefit,” he says.
Although your lifetime insurance plan may pass to your heirs income tax-free, it can affect your estate tax. If you’re who owns the insurance coverage policy, it’s going to be a part of your taxable estate once you die. Factors to consider your lifetime insurance coverage will not have an impact in your estate’s tax liability.
In the event your spouse is the beneficiary of your policy, then there’s nothing to worry about. Spouses can transfer assets to each other tax-free. If the beneficiary is anyone else (together with your children), the insurance policy will soon be an integral part of your estate for tax purposes. As an example, suppose you buy a $1 million life insurance policy and name your son whilst the beneficiary. Whenever you die, the life insurance policy will undoubtedly be a part of your taxable estate. If the total amount of your taxable estate exceeds the then-current state or federal estate tax exemption, after that your policy may be taxed.
To prevent having your life insurance policy taxed, you can either transfer the policy to another person or put the policy into a trust. Once you transfer an insurance plan to a trust or to someone else, you certainly will no longer own the policy, which means you will not be in a position to modify the beneficiary or exert control of it. In addition, the transfer can be at the mercy of gift tax in the event that cash worth of your policy (the quantity you would get for the policy when you cashed it in) is more than $14,000 (in 2016, this figure rises every couple of years with inflation). If you decide to transfer a life insurance coverage, still do it away. When you die within three years of transferring the insurance policy, the insurance policy will still be incorporated into your estate.
If you transfer a life insurance coverage to a person, you’ll want to make sure it is someone you trust not to cash in the policy. For instance, if your partner owns the policy and you get divorced, you will have no chance to get it back. A far better option could be to transfer the policy to a life insurance trust. If that’s the case, the trust owns the insurance policy and it is the beneficiary. You can then dictate who the beneficiary for the trust may be. For a life insurance trust to exclude your policy from estate taxes, it must be irrevocable and also you cannot serve as trustee.
Your greatest challenge, plus the reason so many policies go unclaimed, could simply be locating an insurance policy. With so many companies in existence (and so many more not any longer around), you need to be able to find a lot of information first, and the further back you are going, the harder that may be.
However, for those who have enough time and energy, along with access to the deceased’s records, the payoff might well end up being worth your time.
