Life Insurance: What Survivors Need to Know

Since September 11, more and more people are looking into life insurance. According to popular online insurance sites like quotesmith.com and insurance.com, term life insurance requests are up an average of 70% for the first 2 weeks of October compared to the same time period in September right before the attack. Deciding how much insurance you need to buy and what type kind of insurance is best for you can be tricky. Early Show financial advisor Ray Martin has some advice.

Being prepared for the loss of a loved one is a topic on many people's minds in the wake of the terrorist attacks.

As survivors move beyond the daily struggle to put together disrupted lives, confronting financial needs becomes a great effort of its own.

One of the most important financial resources survivors have to ease this struggle is adequate life insurance. Life insurance benefits, which are typically paid within 30 days of proof of death, provide tax-free cash to pay for childcare, housing, bills, and final expenses.

Yet many survivors often can't find or don't know about life insurance coverage that exists for family members or friends that have passed and are faced with having to locate information about the policy.

Survivors can conduct a search for any lost or misplaced life insurance benefits using these steps:

Check with the employee benefits office at the deceased's latest and previous places of employment. If they were a member of a union or a trade association, also check with the welfare or membership benefits office. Often employees are covered by group life insurance contracts with benefits ranging from $10,000 to $50,000.
Reference pay stubs over the past 12 months for life insurance deductions. Ask the employer or payroll service for the contact information of the insurance company to which payments were sent.
Check the deceased's bank statements and canceled checks for the last few years to see if any checks may have been written to pay life insurance premiums. Remember: Premiums can be paid annually, quarterly, or monthly and through direct deduction from the account. Contact each insurance company to which payments were made to inquire about coverage that may have been in force.
Look at mortgage statements for any portion of the monthly payment that included mortgage insurance premiums. Call the mortgage servicing company to determine the amount of life insurance benefits if this is the case.
Review the deceased's income tax returns for the past 3 years. Look for interest and dividend income reported on schedule B that was received from life insurance companies. Also check for deductions for interest paid to life insurance companies on schedule A. Life insurance companies pay interest and dividends on accumulations on permanent policies and charge interest on policy loans.
Look up all credit card and loan accounts. Often individuals buy additional credit life insurance that provides cverage in the amount of the loan or debt in the deceased's account. Check the deceased's address and telephone contact information for the names of insurance agents, companies, and policy information. Contact every insurance company with which the deceased had some information, even if you're not sure they had a policy with them.
Carefully check the deceased's mail for 13 months after death for insurance policy statements or premium notices, which usually are sent annually. If a policy has been paid up, there will not be any notice of premium payments due, but the insurance company may still send an annual notice regarding the status of the policy, or it may pay or send notice of a dividend.
Read the deceased's final will and trust documents. It's wise to review papers with the attorney who wrote them. Look for any addendums or schedules that reference life insurance policies or trustees. Contact all institutions and individuals identified in these documents for information

If All Else Fails

If you still believe there are policies that have not been located, you may wish to directly contact all life insurance companies that sell coverage in your state to see if a policy exists.

The state insurance department should have a list of all life insurance companies licensed to do business in the state in which the deceased may have purchased a policy. Also check with Best's Insurance Reports, available in the reference section of many larger libraries. This annual update lists insurance company names and addresses, as well as insurers' name changes, mergers, and other changes.

Finally, check with the state's unclaimed property office to see if any unclaimed money from life insurance policies may have been turned over to the state.

A Better Alternative

Clearly, this situation can be avoided by creating a list of all life insurance coverage including insurance company names, phone numbers, policy numbers, benefit amounts, and beneficiaries.

The list should be updated each year and kept with the actual policies and coverage certificates, in a safe place. The beneficiaries should be informed as to the whereabouts of these documents and provided access to them.

Getting adequate life insurance is only half of taking care of loved ones. It's also important to make sure that they will have access to the benefits when they need them.

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