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Don't just buy life insurance, tell your beneficiaries where to find it

By Maryalene LaPonsie on September 30th, 2011

Most life insurance policyholders feel confident their beneficiaries will be able to file a claim for their death benefits, according to an online survey conducted by Nationwide. The policyholders have told their beneficiaries the policy exists and many have even shared the face value. However, they neglect to tell their heirs where the policy paperwork is located, and 1 in 5 have not provided updated beneficiary contact information to their life insurance company.

Those findings highlight the need for greater communication between policyholders and their beneficiaries. Without proper documentation, beneficiaries may have difficulty submitting a claim. Likewise, life insurance companies can't contact the designated beneficiary if they lack the correct address and phone number.

"Though most policyholders have done a good job of preparing their beneficiaries, there are some who need to take additional action to ensure their policies are kept updated so that, when the time comes, benefits due are paid in a timely manner," Peter Golato, senior vice president of Individual Protection for Nationwide Financial, said in a statement.

Life insurance survey highlights need for better communication

The Nationwide survey did include some encouraging news. The vast majority--91 percent--of life insurance policyholders say their beneficiary is aware of the policy. In addition, 84 percent say they have discussed some aspect of their policy, such as the face value or insurance agent, with the intended beneficiaries.

Still, 57 percent have not told their policyholders where to locate the policy paperwork. Other policyholders do a poor job of keeping their beneficiary information up-to-date with life insurance companies. According to survey respondents:

  • Twenty percent have not provided their life insurance company with updated contact information for their beneficiaries.
  • Fifty-five percent did not change their beneficiary after a divorce.
  • Seventy-five percent have never changed their policy beneficiaries.
  • Of those who have changed their beneficiaries, 77 percent did so five or more years ago.

Whether you have term life or whole life coverage, it is important to review and update beneficiary information on a regular basis. Many life events--such as the birth of a child or a divorce--may necessitate a change in who is listed as a beneficiary. Nationwide advises consumers to review their policies annually and make changes as needed.

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