Life insurance policies serve a very specific purpose. When one or more people are financially dependent on another person, if that person passes away, their loved ones are left to deal with several very difficult and very different things. They obviously need to cope with their grief – losing a loved one is a tremendously hard experience.
Aside from that, however, they need to face a new reality in which they need to make drastic changes in their lives. Since their recently departed loved one was the sole or primary earner in the family, the surviving partner must find a stable source of income to support the family. Unfortunately, recurring expenses – mortgages, medical costs, college and university tuition, food, clothing – don’t cease to exist.
Having to deal with all that when someone has just lost their closest one, their partner, is something that could easily break a person.
That’s precisely where life insurance comes in: it gives people the time they need to process their loss, find their way, without having to worry about their family’s lives falling apart.
How does life insurance work?
There are various types of life insurance. Without going into specifics, they differ in terms of period, coverage, outcome (whether there is an event at the end of the policy), etc. Regardless of whether it’s a ‘regular’/basic policy or an extended one (which covers not only death but incapacitation as well), if an event occurs, the beneficiary should receive a payment from the insurance company.
In order for that to happen, the insurance company must first be made aware of the death of the insured person. It must then locate the beneficiary and enable them to receive payment.
That part represents the greatest risk for both policyholders and beneficiaries. There are many things that could go wrong:
- the insurance company isn’t aware the policyholder has passed away;
- the beneficiary is not aware of the presence of a life insurance policy;
- the beneficiary changed or lost access to their phone or email, moved to another city or country, or simply changed their local address;
- the insurance company merged with another entity and changed their contact details or processes.
This results in billions of dollars remaining unclaimed every year and not reaching their rightful owners, and this figure is growing at an alarming rate.
How to find out whether you’re someone’s beneficiary
As a policyholder, there are many ways to mitigate that risk for you and your loved ones. We’ve explored some of the most useful ones in a separate article.
As a beneficiary, however, the options are much more modest:
- Start the conversation early
The first and most basic thing you could do is to start the conversation early. It’s not an easy discussion to have with your partner – nobody wants to talk about death. But the sooner you have an honest talk, during which you both make each other aware of the presence of any insurance policies (or other assets, for that matter), the better you’ll both feel after, and the more protected you’ll be. That way, you’ll both be aware of all the important information that’s necessary to file a claim with the insurance company should anything happen.
A difficult, yet simple, talk might go a long way should anything happen to either of the partners.
- Read through personal documents
If one of the partners has already passed away, the options become more limited. One of the next ‘best’ things for a person to do is to go through the personal documents of their recently departed loved one. While it doesn’t sound like a pleasant activity, it’s a reasonable thing to do if you’re unsure whether there’s a life insurance policy or not. Of course, this extends to both physical and digital documents.
- Contact the insurance company
If you’re unsure whether there’s an insurance policy or not, contact the insurance company. Regardless of whether your spouse made you aware of the presence of one or not, it’s never a bad idea to double check. People tend to use services and companies they’re happy with multiple times for different purposes, so your partner might have opted for a life insurance policy with the same company with which they insured the family car or house.
- Go to a national registry
Some countries have national registries for insurance policies. If one is present where you live, be sure to enlist to check it. Those registries might even offer online services, making it much easier to search for a policy in which you’re a beneficiary. They usually require some basic information about you and do a search within all registered insurance companies.
The options for a person to find out about a life insurance policy in which they were named as the beneficiary are far more limited than the options a policyholder has to ensure their beneficiaries are protected. Regardless, there are still actions to be taken at every step of the process. Some of them cost very little initially, and over time, while the benefit they provide – peace of mind for you and your loved ones – tremendously outweighs any costs.
We at DGLegacy® are committed to helping you with that. Our application allows its members to categorize their assets in a safe space and designate beneficiaries for each of them. The proprietary algorithm we use in our Heartbeat protocol ensures your loved ones are notified should something unforeseen occur, so they’ll be proactively informed about their designated assets without having to worry about remembering access details or the location of physical vaults. Digital inheritance services such as DGLegacy® ensure your loved ones will be able to identify and locate the digital and financial assets that you’ve designated to them.