Life Insurance?

Question

My Father whom passed away in 1993, come to find out had forgotten about a life insurance policy he had with my mother in the 60's. She had even forgotten it. Now after notifing the ins. Company they have done a 600 payout cause of the cost of he policyhad deminished through the years. My question is this...One being how he died in 1993 and the ins. comp had no knowledge of his passing til a few months ago, Dont they owe the survivor benefits since his policy was in effect at his death. And 2, if the policy value had dminished from years of paying the premiums, what about the 12-14 years it was paying on a dead mans insurance. Help and thanks

Answer 1

The policy must have been changed by your father to pay for itself from the cash value.

When this is done, the premiums are Borrowed as a Loan against the cash value. In doing so, the Insurance company charges interest on the Loan.
The Interest and the Premiums are deducted from the cash value, which is part of the death benefit.
This greatly diminishes the Death Benefit.

When notification to the insurance company of a death is delayed, as in your case, the Premiums and Interest continue. When the policy is paying for itself in this manner, the company has no way of knowing of a death until they are notified. If the premiums were being paid by the insured or the family, a bill for the premium would have been received and it follows that notification would have been sent.

The standard procedure when the policy is paying for itself, is for all premiums and interest charged or paid After A Death, should be refunded, plus, any death benefit remaining at the date of death.

After 13 years, to present, not much would be left.
You should have received a statement detailing the above, showing the value at the time of his death and the premiums paid after his death, and how the funds were computed to arrive at the amount paid.

Insurance companies fail miserably in informing people this process and how it functions.

They make lots of profits in this manner.

I've been there.

Answer 2

I would make a strong case that they should pay the death benefit as of the date of death.

They should have been sending annual policy statements to your dad and premium loan announcements if they no longer had the correct address they should have performed a search to find him. In doing that they would have found him deceased.

I would contact the insurance department of the State your parents live, explain the situation to them and get their opinion and help.

It you make a big deal about this and threaten to go public or a lawsuit. They will make you whole.

They don't want bad publicity or upset policy holders. After all they are in the business to pay claims.

Answer 3

I would advise you if you are the recipient of the policy with your mother, to make an appointment with an ombudsman or a small claims court. At the least get some advice from a professional person who deals with those sort of claims. Somebody who has no vested interest in your claim! Good luck! hope you have a win.