The 60 Minutes Report on Life Insurance Shouldn’t Deter You from Buying Coverage
In case you missed it, last Sunday 60 Minutes revealed a scathing report about the life insurance industry. The report revealed that some of the most well-known insurance companies are not properly reporting and paying out unclaimed life insurance policies. This report is a black eye to the industry and sure to leave a bad taste in the mouths of consumers who are shopping for life insurance. But before you decide to put off buying life insurance coverage, it is important to understand all of the facts.
The Facts About the 60 Minutes Report on Life Insurance
Here’s how life insurance is supposed to work. You purchase a policy and name beneficiaries who are usually your loved ones such as your spouse or your children. If you die while covered, your beneficiaries must put in a claim with the life insurance company to get the death benefit from your policy. But what if your beneficiaries didn’t know you had a policy? How would they know to initiate a claim?
The report by 60 Minutes exposed that audits of some of the leading insurance companies have shown a systematic industry wide practice of not paying beneficiaries who were entitled to a death benefit. The beneficiaries in question never knew that a policy existed but the insurance companies knowingly held on to the death benefits even though they knew the policyholder was deceased. In some cases, some insurance companies continued to take premiums from the cash values built up in whole life policies after the policyholder died.
Recently, 25 insurance companies have settled with the states and agreed to pay out over $7.5 billion in settlements. The policies referred to in this report represent a small amount of the overall outstanding life insurance policies that have been paid out to date. Although some of the policies in question are worth more than $1 million, most are valued less than $10,000. Beneficiaries can check with their state of residence to see if they are entitled. If you had a parent or spouse that passed away, it might make sense to check your state’s database to see if there is any money due to you from a life insurance company.
Should this Report Impact Your Decision to Buy Life Insurance?
The report by 60 Minutes, although disturbing, should not deter you from buying life insurance. Life insurance provides essential protection for your loved ones and is the foundation of any good financial plan. The fact is that life insurance companies in the U.S. have paid out more than $600 billion dollars in life insurance death benefits over the last 10 years alone according to www.acli.com. The U.S. life insurance industry overall has an excellent track record of paying claims quickly when filed by beneficiaries. The important thing to remember is that policyholders need to communicate to their beneficiaries that a policy exists. Here are 5 things you need to do after you buy a life insurance policy.
Your Beneficiaries Need to Know About Your Life Insurance Policy
Policyholders should take the proper precautions to ensure that their beneficiaries are aware that there is a policy in place. This includes group coverage through work or an individual policy. Many people purchase a policy, put it in a drawer and never look at it again. Policyholders should sit down with their beneficiaries and share the details of the policy and where it is kept. It is also important to update beneficiary designations whenever there are any life changes such as a divorce or if a beneficiary predeceases you. Your agent should also review your coverage with you regularly to make sure that all of your beneficiary designations are accurate. Here’s what you need to know about naming beneficiaries on your life insurance policy.
Our Final Thoughts on the 60 Minutes Report on Life Insurance
We were appalled by the findings in the 60 Minutes report. We feel that life insurance companies must put the best interests of their policyholders and beneficiaries first. As agents, we always want to be able to deliver on the promise to our insureds that their loved ones will be taken care of in the event of their death. That’s why a good agent will focus on building long-term relationships with their clients so that these types of issues are prevented. Even though this report puts many life insurance companies in a bad light, consumers should know that life insurance companies consistently pay out death benefits in a timely fashion. The life insurance industry is highly regulated by the states and hopefully the practices mentioned in the 60 Minutes report on life insurance won’t happen again.
Watch the 60 Minutes Report on Life Insurance
About Us
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com.
