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What if you diligently paid your life insurance premium on a regular basis, but your beneficiaries never received the payout?

It seems unbelievable, but it happens: The National Association of Insurance Commissioners and a number of state insurance departments are examining the practices of some life insurance companies that failed to pay out more than $1 billion in death benefits on small policies.

Because the insurance companies in question didn't use the Social Security Administration's Death Master File to monitor who had died, that large amount of money never made it to beneficiaries unless the beneficiaries filed a claim.

Take action now to make sure this doesn't become an issue when you're gone. Make sure beneficiaries have information about the life insurance policy, including the policy number, the issuing agency, and the value. Also update beneficiaries' contact information when necessary so the insurance company has it on file.

Source: SmartMoney

Published December 5, 2011

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