Life Insurance FAQ
What is a beneficiary?
This is the person or financial institution (a trust fund, for instance) named in an insurance policy as the recipient of the funds in the policy, in the event the policyholder dies.
In addition to naming a specific beneficiary to receive the proceeds of your life insurance policy (permanent or term), you should name a secondary or “contingent” beneficiary, just in case you outlive the first beneficiary.
If there is no living beneficiary, the proceeds will be paid to your estate and have to go through probate proceedings, resulting in a possible delay before your family receives the money. If the proceeds go into the estate, these proceeds may be subject to estate taxes.
Can I replace my old policy?
Yes! But, if you already own a life insurance policy, think carefully before you replace it with another. Do not give up your old policy, until you can determine if you are:
1. Still insurable.
If your health has deteriorated, you may be refused coverage after a medical exam by the new insurance company.
2. Going to save money.
You are now older than when you bought the existing policy and your premiums will be higher based on your age alone.
3. Not giving up valuable benefits.
Your older policy may have protections, dividend rates or other provisions that the newer policy may not offer.
4. Not leaving behind cash value.
Ask your agent what will happen to any cash value that has accumulated in your old policy if you replace it with a new one.
It is possible that a new policy will offer superior features, lower premiums and more coverage that would make a switch worthwhile. Just make sure before you proceed with the replacement.
How can I locate a lost life insurance policy?
If you suspect that someone who has died may have had a life insurance policy and named you beneficiary, there are several steps you can take to track down the missing policy:
1. Call your state’s department of unclaimed property to see if the insurance company put the policyholderís name on their list.
2. Check the deceased’s safety deposit box at the bank, their file cabinets and personal computer records to see if you can find the policy.
3. Look for old checks written to insurance companies in the past to trace old policies.
4. Ask older relatives if the deceased ever mentioned that they had a life insurance policy and which company they had it with.
5. Call the insurance company that provided auto and home insurance to the deceased, because they might have used the same company for life insurance.
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Where can I get additional information on life insurance?
The experts at Hartley Insurance can provide you with a wealth of information, but if you would like an outside source of generic information you can contact:
American Council of Life Insurers
1001 Pennsylvania Avenue
N.W., Washington, D.C. 20004-2599
Life and Health Insurance Foundation for Education