Insurelane Insurance Blog

Many people who are owed life insurance benefits may find it harder to collect what’s owed to them in the future. This is because the Death Master File, which is put together by the SSA (Social Security Administration), will be harder for the public to access.

The file lists most Americans who have passed away during the past 75 years and includes personal information such as Social Security numbers and ZIP codes. Insurance companies used this list to find out if any of their policyholders had died and would then pay out the benefits to the beneficiary. At least that’s what they were supposed to do.

According to an article by insure.com, insurance regulators in California, New York, and Florida recently said that many insurance providers hadn’t been using the file and beneficiaries were faced with the task of hunting them down to receive the money that was rightfully owed to them. Kevin McCarty, the Florida Insurance Commissioner, said insurance companies had $1 billion of beneficiaries’ money and could have easily paid it out if they checked with the Death Master File.

But it may even be harder for beneficiaries to collect now since the SSA started protecting this file on Nov. 1, 2011 and the majority of it can now be accessed by federal agencies only. This means the insurance companies and public won’t have access to the list of most recent deaths. The SSA said the system was changed because it isn’t allowed to publish death records it receives from the states. But this seems odd to many people since the file has been around since about 1980 and it surely didn’t take 30 years to find out they were doing something wrong.

It’s believed the file may be harder to access now because criminals were using it to gain personal information that could be used in illegal scams, such as falsely claiming deceased children as dependents. However, insurance regulators say the insurance companies should still be using the Death Master File even if it’s just a partial list now.

It’s recommended that if you have a life insurance policy you should make sure the beneficiaries know about it and where it’s located. And if you ever move, you should make sure the insurance company has your new address.

It’s never a cut and dry issue when it comes to life insurance as everybody’s needs differ due to their own personal and family circumstances. Each person’s situation is unique. There are several factors you should consider when deciding if life insurance is a good investment for you.

You need to evaluate your family’s financial situation and try to visualize what life would be like for them without you. Would they be able to survive financially? You need to consider what type of bills your family has to pay on a regular basis. This includes things such as a mortgage, car payments, bank loans, credit card bills, and future educational costs for your children.

If your family depends on you financially then it’s a good sign that insurance would be helpful. This also includes taking into consideration the daily expenses that are often overlooked and taken for granted by most people. You will need to consider what your current assets are and how long they will last should something happen to you. These current assets could include any investments you have, retirement accounts, and your current bank balance.

It’s a good idea to make out a list of your expenses to see exactly where your family’s money is going in a daily basis and how much they would realistically need to continue their current lifestyle. Take a look back over the past couple of years to get a good idea of how much money is spent each month. You also need to consider one-time and unusual payments such as medical bills and auto repair expenses etc.

If you feel your family could maintain their current lifestyle without your income then life insurance may not be your priority. If they would struggle without your income you should seriously look into a policy as an option for their future. You also need to realize that it’s virtually impossible to predict the future and how a family’s financial situation could be drastically altered. Remember, the bills don’t stop after your death. There could be expenses such as funeral costs and estate taxes to deal with as well as unpaid medical bills.

Life insurance isn’t for everybody though. You may already own your home, don’t have any outstanding loans to deal with and your children, if you have any, have already graduated from college. If your finances are in order and nobody is depending on you financially then a policy could just be an extra expense. If this is the case then some other type of medical insurance might be more suitable for you.

It looks like Holocaust survivors may be a step closer to collecting on Jewish life insurance policies that were never paid after World War II. This is due to members of American Congress filing bills that will enable them to sue European insurance companies that never paid beneficiaries money that was allegedly owed to them.

Insurance firms such as Assicurazioni Generali of Italy and Allianz SE of Germany may be forced to produce their lists of policies that were written up before the war. This could lead to aging survivors being paid proper compensation if they win their court cases. Several members of the Senate and the House have shown their support for the newly created legislation.

Scores of Jewish families attempted to collect on life insurance policies after the war. These plans were taken out on people who died in Nazi concentration camps, but the insurers said beneficiaries needed death certificates or the original paperwork, which of course weren’t available.

A South Florida lawyer for survivors, named Sam Dubbin, said about only three per cent of almost 900,000 insurance policies had been paid out. The policies were worth close to $600 before the war and are estimated to be worth about $20 billion today.

There have been several organizations formed to deal with the insurance claims since the 1950s. One of these is the International Commission on Holocaust Era Insurance Claims. This group was able to secure just over $300 million for approximately 48,000 claimants between 1998 and 2007.

It looks like this may be the final hope for survivors. Previous requests to sue had been turned down by federal courts and the U.S. Supreme Court as they said the commission was the only one that could end the dispute. If this bipartisan bill happens to pass, then the survivors will be allowed to sue the insurance companies in state courts. The bill never gained any momentum in the past when it was introduced in the House.

According to FoxNews.com a vice president of Allianz of America admitted the company collaborated with the Nazis, but said the Third Reich forced them and other insurance firms to hand over Jewish insurance policies and other assets. She added they didn’t really have a choice in the matter and the company will be glad to listen to people who have claims from the Second World War.

Buying life insurance is considered an ideal way of taking care of loved ones and your funeral costs after you’ve passed away. But it’s not really going to help much if you buy a policy and hide it away in the closet and nobody else knows it exists. Unfortunately, this is often the case with many people.

If you do have a policy and happen to die, the money might never make it's way into the hands of those it was intended for. Each year in America alone there are hundreds of millions of dollars of life insurance benefits that go unclaimed because people are unaware they’ve been made beneficiaries of policies.

All unclaimed life insurance money ends up with the insurer for awhile and then it’s placed into the state’s unclaimed property division. The information regarding the money and policies is then made available to local newspapers and/or websites. But years can pass by before that ever happens and it’s still no guarantee you’re going to find out about a loved one’s policy.

It’s not really the insurer’s fault as many companies are unaware that one of their policyholders has died. When they find out, they try to contact the beneficiaries. According to the New York Times, the state of New York has received just over $400 million of unclaimed life insurance money since the year 2000. About $64 million of it has been claimed since then. Since 1943 New York has claimed just over $10 billion in unclaimed policies, property, and other securities.

It’s estimated that only around 20 per cent of policies are claimed each year. Most of them will never be claimed and New York said there’s one outstanding policy worth $1.7 million. Insurance companies generally have between two and seven years after somebody’s death to transfer the money to the state fund, depending on the state. The states then use that money as they see fit until it’s finally claimed, if it ever is.

The lesson to be learned here is to make sure you notify somebody if you purchase a life insurance policy, especially the beneficiaries. You pay enough in taxes and fees in your lifetime it’d be a shame to see money for your loved ones go to the government.

A study by MetLife insurance group that polled married men and women with children under the age of 18 showed that on average, men who have young children have life insurance policies that cover them for five times their yearly household income. Whereas women who have minor children are insured on average up to three times the household income. For some insurance experts, it concerned them that women didn't have as much coverage as men.

They point out that if a working parent passed away the family's source of income would be affected as well as other things such as their tuition assistance, health insurance, and other types of financial benefits. They feel citizens should get professional assistance from insurance agents to make sure they have an adequate amount of life insurance, especially after the study showed not too many women consult anybody about their financial matters.

More men surveyed, 48 percent compared to 26 percent of women, said their employers do a good job of educating them on their options when it comes to life insurance, which can also lead to better job satisfaction. According to the poll, only 38 percent of the women said they were happy with their employer benefits compared to 56 percent of men.

MetLife says there are some things to consider when it comes to life insurance, such as enrolling in employers' group life plans, even if you have to pay some of the costs yourself as these plans are less expensive and have no medical or limited underwriting.

The company stated many businesses offer employees the chance to buy supplemental life insurance at affordable group rates in the enrollment period and sometimes at other times of the year.

Do you ever wonder what really goes on when an elderly group of women get together? Well in the case of 67-year-old Jean Crump of South Los Angeles and her friends, it was pretty creative, but unfortunately illegal.

The States News Service reported that Crump was convicted by a federal jury for staging phony funerals to bilk money out of insurance companies by seeking payouts on their life insurance policies.

Crump was working at Simpson and McGee Mortuary and got involved in the racket to defraud the insurance providers by filing false claims for life insurance policies totalling $1.2 million for somebody who hadn’t died.

Crump and her associates were pretty thorough as they had phony death certificates prepared, bought a burial plot and then lowered an empty coffin into it. The fake funeral made everything seem normal, but a couple of insurance firms got suspicious and starting poking their noses around. This worried Crump, and she then dug up the coffin and filled it with body parts of a cow and a mannequin before cremating it.

The women then filed more bogus documents at the County of Los Angeles which stated the fake corpse's body was cremated and the ashes scattered at sea. Crump even tried to bribe a doctor by offering $50,000 to falsify medical records to support the phony death certificate.

It was also revealed the criminals defrauded a number of companies that hand over cash advances for funerals in return for some of the decedents' life insurance policies. Crump made up phony invoices which claimed a funeral took place at three separate mortuaries. Two of the insurance providers sent her money in advance to cover the fake funeral.

Crump was convicted on a count of mail fraud along with two counts of wire fraud and faces a possible prison sentence of up to 90 years. Three other women will face charges as well.

Term life insurance provides coverage at a fixed rate of payments for a limited amount of time. After that period expires, coverage at the previous rate is no longer guaranteed, and the client must either lose coverage or purchase additional coverage with different rates and conditions.

Now, homeowners who have tied their term life insurance policy to the final payment of a mortgage, and then refinanced their mortgage for a longer term, are finding themselves in a pickle.

According to Insurance & Financial Advisor, homeowners who experience this unintentional consequence should recalibrate their term life insurance policy so they can avoid this problem.

Record low interest rates have caused many homeowners to refinance their mortgage at least once or twice in the past few years, and many have chosen to extend their terms to 15, 20, or even 30 years.

Many buyers are choosing the term life insurance based on when they will conclude their mortgage payments. This protects them from leaving family members with large debts in the event of their untimely death. When changing the terms of their mortgage upon refinancing — many fail to renew their term life policy as well.

Premiums can quadruple for customers who wait until the end of their term life insurance policy to renew the policy. Term life insurance tends to be the most expensive form of life insurance but becomes more expensive with age.

Financial giant ING has a new product on the market: Return of Premium Term Life Insurance. Issued by ReliaStar Life Insurance Company, the policies are available with 15, 20 or 30 year terms. If the policy is surrendered before the term is over, the premiums paid for it will be returned.

“This type of term insurance appeals to people who are concerned about buying a product they think they may never need,” said Jim Gelder, the president of ING Life Distribution. “At the end of the level term period, they get back what they've paid for the policy.”

Since the benefits of term life insurance expire after a certain period, it‘s generally much cheaper than permanent life insurance. By adding a return of premium feature, ING has made term life more attractive — not only to offer protection for families and loved ones, but to use as a financial tool as well.

“In addition to the death benefit protection, return of premium term life insurance can serve as a vehicle for college financing, mortgage funding, business planning or a variety of other purposes,” said Gelder.

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Financial giant ING has a new product on the market: Return of Premium Term Life Insurance. Issued by ReliaStar Life Insurance Company, the policies are available with 15, 20 or 30 year terms. If the policy is surrendered before the term is over, the premiums paid for it will be returned.

“This type of term insurance appeals to people who are concerned about buying a product they think they may never need,” said Jim Gelder, the president of ING Life Distribution. “At the end of the level term period, they get back what they've paid for the policy.”

Since the benefits of term life insurance expire after a certain period, it‘s generally much cheaper than permanent life insurance. By adding a return of premium feature, ING has made term life more attractive — not only to offer protection for families and loved ones, but to use as a financial tool as well.

“In addition to the death benefit protection, return of premium term life insurance can serve as a vehicle for college financing, mortgage funding, business planning or a variety of other purposes,” said Gelder.

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MassMutual Life Insurance Company is now offering free life insurance policies for low income parents in the Akron, Ohio area, with dependent children under the age of 18. The initiative, called the LifeBridge Free Life Insurance Program, offers 10-year term life policies worth $50,000 — with the premiums paid in full by MassMutual.

Eligible participants for the free life insurance program include working parents who are between 19 and 42 years old, who have one or more dependent children under the age of 18. They also must be employed full or part time with annual incomes between $10,000 and $40,000.

The benefit, in the event of the parent’s death, will go to a trust to help with the dependent child’s or children’s future education. Qualified expenses include tuition for most schools, colleges and universities, room and board, and textbooks.

“We are extremely excited to bring LifeBridge to the Akron area,” said MassMutual financial professional Amie L. Palffy. “We want to help ensure that access to educational opportunities exists for children of working families and not just those who are lucky enough to have parents with adequate financial means. There is absolutely no cost to the insured for a policy under the LifeBridge program.”

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Enterprising seniors have found a way to make money in their final years: selling their life insurance policies to investors.

For seniors, it means cash upfront, giving them more money to enjoy. For the investors, it means a guaranteed payout, with the likelihood of a profit.

For the insurance industry, it could mean trouble.

In the past, many people canceled their life insurance policies after retirement. With their children grown up and enough money saved to cover their final expenses, there was little reason to keep paying insurance premiums. That meant insurance companies collected much more money than they paid out.

But when an investor buys a policy, they keep it in effect — so the insurance company will have to pay the death benefit. The investors take over the premium, essentially betting that the person who originally took out the policy will die in the near future. As long as that person doesn’t live an extra 20 years, the investors stand to make a large profit.

If too many life insurance policies end in payouts, the insurance industry could end up raising rates. This could price out many lower- and middle-income people, leaving them unable to purchase this essential tool for safeguarding their family’s future.

“If payouts increase, the cost of insuring people is effectively going up and that will definitely increase the price of policies,” said J. David Cummins, Professor of Insurance and Risk Management at the Wharton School of the University of Pennsylvania.

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If you weren’t around to help your child pay for school, would they still be able to afford it? For many families who don’t have life insurance, the answer is “no.”

In a new study, 3 out of 4 of parents without life insurance said that if the “primary wage earner” in their family were to die, paying for their child’s education would be a challenge. 40% said it would “make college harder to afford.” 36% said it would make paying for college “completely unaffordable.”

It’s a different story for parents who do have life insurance. 84% of parents who have life insurance said that if their primary wage earner were to die, paying for college would be “just as affordable or easier to afford.” Only 1% of parents in this group say that college would completely unaffordable because of an untimely death.

“The ability to afford a college education is not something that moms and dads should be leaving to chance, and unfortunately that’s what so many parents are doing by not having adequate life insurance coverage,” said Mark D. Johnson, the chairman of the Life and Health Insurance Foundation for Education.

But on the bright side, it was also reported this week that life insurance premiums are expected to go down in 2007. Overall, life insurance premiums are 50% cheaper now than they were 10 years ago.

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Who wouldn’t mind paying less for their life insurance premiums?

According to the Insurance Information Institute, the average cost of life insurance premiums is going to drop 4% in 2007.

“The four percent drop projected for 2007 is in line with the average five percent per year drop beginning in 2000,” said I.I.I. economist Dr. Stephen Weisbart. “The result is that, in 2006, premiums are less than half of what they were over a decade ago.”

According to Dr. Weisbart, rates have been dropping because the primary market for life insurance — people between the ages of 25 and 44 years — have had a major drop in their death rate. In 1996, the rate was almost 178 deaths for every 100,000 people in that age group. Today, the rate is almost 162 deaths for every 100,000 people.

“That is nearly a 10 percent drop in the death rate in less than a decade for the prime insurance-buying ages,” added Dr. Weisbart.

So how much can you expect to pay?

A 40-year-old man who doesn’t smoke will be able to get a 20-year term life policy worth $500,000 for $615 a year. If he qualifies for the “preferred risk” rate, it will only cost him $340 a year.

The I.I.I. expects rates to go down for permanent life policies, too. But for most insurance consumers, the rates on term life are more important. A recent study from LIMRA International found that 72% of the married couples who bought life insurance in 2003 — and 62% of the single parents — bought term life policies.

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Do you have enough life insurance? If you’re like nearly half of all Americans, you probably don’t.

A just-published study by LIMRA International reveals that 44% of households in the United States either don’t have life insurance and think they should, or have a policy but think they need more. And almost 75% of households don’t have a personal life insurance or financial advisor.

Some other facts about life insurance:

• 1 out of 4 men don’t have life insurance
• 2 out of 3 men between the ages of 18 to 24 don’t have life insurance
• In 2004, the average amount of life insurance coverage was $146,300
• 3 out of 4 households that need more insurance think they can’t afford it
• 8 out of 10 consumers find it difficult to decide what kind of life insurance they should buy
• 2 out of 3 don’t know where to go to learn more about life insurance

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Last month, two good friends of mine had their first child — a beautiful, healthy baby girl. After a few weeks of celebrating and seeing family (and finding out firsthand what a challenge parenthood is), they decided it was time to think about life insurance.

Life insurance is a touchy subject for most people. After all, no one wants to put a price on their own mortality. But life insurance protects your loved ones, and my friends decided it was a protection they needed to provide for their new daughter. Trouble was, they weren’t sure which kind they needed.

There are two kinds of life insurance: term life insurance, and whole life insurance.

• A term life insurance policy only lasts for a certain number of years. Because you can outlive the policy, the beneficiaries of the policy (usually your family) may never receive a payout.
• A whole life insurance policy lasts as long as you do. When you pass on, the policy pays out. Whole life is also sometimes called permanent life insurance.

At first glance, whole life seems like the smarter investment. Why would you pay for a policy that might never pay out?

The simple answer: term life is cheaper, and you may never need it to payout. You can save money on the lower premiums, and invest the difference. With a term life policy, you’re protecting your family during your working life.

Take my friends as an example. The dad — we’ll call him John — has a job as a computer consultant. The mom — let’s call her Jane — teaches kindergarten. They make a decent living. They have two cars, and a small house with a mortgage.

Suppose one of them were to die suddenly. Neither would be able to afford the home mortgage without the other’s income. And sending their new daughter off to college someday would be difficult.

So they bought term life policies. If something were to happen to either of them, their policy would make sure that they can keep the house, send their daughter to college, and still have enough left over to be comfortable. And they’re investing the money they save on premiums and saving for their retirement.

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