Do your aging parents have life insurance policies or annuities? If so, the first thing you must do is find the annuity or life insurance policies themselves. Don’t fret. If you can’t find them, you can order replacement policies from the companies if you know the policy number and who the insured is.
Once you find your parents’ policies, you must locate the beneficiary statements for each of them. The statement may be attached to the policy itself or just a separate form with the policy number identifying it. If you can’t find the beneficiary statement, you must contact the insurance company to confirm who the beneficiary is. Type a letter and ask your parent (the owner of the policy) to sign it requesting a copy of the beneficiary statement.
You may ask why it’s so important to find these beneficiary statements. I checked one of my client’s life policies. A $100,0000 policy listed a former wife as beneficiary. It had never been changed. If he died she would have received the funds no questions asked.
Your parents may list someone who is deceased as beneficiary or may not have listed a contingent beneficiary. If there is no clear beneficiary, the funds will be paid to your parent’s estate when they die, subjecting the proceeds to the cost and delay of probate. ( A listed beneficiary avoids probate!)
If the beneficiaries are out-of-date or incorrect, your parent can change the beneficiary by submitting a new form to the insurance company. They may list as many primary beneficiaries as they like, stating the percentage going to each. They must also list contingent beneficiaries. If the primary beneficiary is deceased, the proceeds will automatically go to the contingent. If none is listed, the proceeds will again have to go through probate.
Once you have found the policies and determined that the beneficiaries are correct and the policy is still in force, check with the company again. Make sure you keep the policies and the beneficiary statements in a safe place. Make a separate copy of the face page of the annuity or life insurance policy and the beneficiary statements and keep them with your own records.
By the way, when you check all these policies, make sure you check your own, too!
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Reprinted from Bob Mauterstock’s The Gift of Communication Blog. Subscribe at http://www.GiftofCommunication.com and receive Bob’s Family Meeting Checklist Guide.
