If you saw 60 Minutes on CBS Sunday night you had to be astounded by the absolute greed and thievery of life insurance companies. Many of them, mostly all of the large companies, are being sued in a class action for failing to pay death proceeds to deserving beneficiaries. Roughly $7.5 billion have been withheld by these large companies over the years although the companies were aware of the insured's death. All insurance companies have means to accumulate decedents' names, from a death role, which is checked daily through their database. A spokesman for the insurance companies stated that it as the responsibility of the beneficiary to make a claim. If no claim is made, the company basically continues to use the funds gained through premiums and further invest the proceeds and reap further dividend or interest benefits, as its own. It was also indicated that the companies would continue to use cash value in the policies to pay premiums even after knowing of the death of the insured. Unbelievable! If the proper authorities can't identify this within the definition of criminal felony theft, I don't know how it could be further defined.
In my estate planning experience as an attorney, there are numerous beneficiaries who were unaware that they are designated as beneficiaries of life insurance policies. Nieces, nephews, friends, charities, grandchildren, even some children don't know that they are entitled to life insurance proceeds on the death of the insured. Life insurance policies could be packed away, misplaced or even overlooked after the owner's death by the personal representative and no claim ever filed. If not, the companies assert they have no obligation to contact the beneficiary even though the company may have, or require, the beneficiary's name, date of birth, social security number and a contact address when the policy is initially taken out. Therefore, it is imperative that you list all life insurance policies, annuities and retirement funds on a Schedule and attach it to your Living or Family Trust for your Successor Trustee/Executor.
At the Stephens Law Group, we complete the initial Schedules A and B for our clients to ensure that the Successor Trustee and Executor has knowledge of all assets, investments, life insurance, policies, etc. that are owned by the client. The client then updates the schedule annually.
If you have not created schedules or haven't updated them in several years, this 60 Minute revelation should prompt you to do so immediately. Don't let what I consider to be the epitome of corporate hunger for greed add your beneficiary to their list of "no filed claims". Update your Living Trust Schedules today.