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Knowing the Facts about Insurance

Many people carry life insurance or other policies that are designed to provide for their families when they pass away. There are many types of insurance under which the Deceased may have been covered. Some insurance policies may be cancelled upon death or transferred to other beneficiaries. In cases of accidental death, insurance such as auto or home insurance may provide some type of payment. Overall, it’s important to know what kinds of insurance policies the Deceased had, if any, and what will happen to those policies after death.

Auto Insurance:

If the Deceased was involved in a car accident that caused their death, the beneficiaries of the auto policy may be entitled to an insurance settlement. This will occur only if the insurance policy includes a death benefit. There is generally a set amount of money to be paid to the insured regardless of who was at fault in the accident. It is important to consider that the policy will only pay for the death of the insured—that means the primary policyholder named on the policy and other people named in the policy who pay a separate premium, such as a spouse. Please Note: If someone else was driving the Deceased’s car, but was not actually on their auto policy, the death benefit would not apply to them. These benefits only apply to those who are actually insured and listed on the policy.

Conversely, there are many exclusions that apply to the death benefits in an insurance policy. (Some examples of exemptions: if the person was driving the car for employment purposes, if the death was caused by a disease which in turn caused an accident and if the death occurred when the insured was not on public roads.) Consultation of an attorney is recommended before making a claim.

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Homeowner’s Insurance:

Homeowner’s insurance does not generally cover the injury or death of the insured, but instead, visitors who may be injured or die on the property. If the Deceased died while on someone else’s property, and they are liable in any way for that death, it’s possible that an insurance settlement could be reached with the company who insures the homeowner. At the very least, homeowner’s insurance can help to pay for medical expenses incurred by the injury prior to death. As with all insurance policies, exclusions do apply. If you feel you may be entitled to a settlement, consult an attorney to determine if the owner of a property is liable.

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Life Insurance:

Life insurance is provided specifically to help cover financial losses when someone dies. There are many types of policies and it’s important to understand the Deceased’s policy to know what type of settlement beneficiaries may receive.

Types of Life Insurance:

Term Life Insurance

When Term Life insurance is purchased, it covers the insured for a specific price and period of time. If the insured dies during that time,  the value of the policy is paid to the beneficiaries. Term Life insurance does not have an investment component.

Whole Life Insurance

Whole Life Insurance is similar to Term except the policy is for the insured’s “whole” life and pays out the value of the policy upon death. In addition, some Whole Life policies have an investment component. They pay modest dividends from the insurance company because the insurance company invests a portion of the premiums over the time insured.

Universal Life Insurance

With Universal Life Insurance, the insured pays more than the amount of the premium. The extra money goes toward an investment––usually a mortgage or bond––and the returns can either be used against premiums or allowed to accrue. Depending on the type of policy, the money in the cash-value account goes towards the face value of the policy upon death. The beneficiaries, then, receive most of the cash-value and all of the face value of the policy upon death of the insured.

Variable Life Insurance

Variable Life Insurance policies are the same as Universal policies except that there are more choices for investments such as stocks.

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Unsure if the Deceased had Life Insurance?

If you are unsure whether the Deceased had a life insurance policy, there are several resources to explore:

  • The first place to research is financial records. Look for a record of the premium payments the Deceased was making through bank accounts and records of checks. Also research credit card statements and the Deceased's credit report  for transactions that could be insurance premium payments.
  • Ask employers, both former and current, to learn if the Deceased took out life insurance through their workplace.
  • Ask family and friends who may have known details about the Deceased’s finances.
  • Contact the Deceased’s auto and homeowner’s insurance representatives. They may have sold the Deceased a life insurance policy or might know of the company from whom the Deceased purchased the policy.
  • If other methods fail, there are companies that will perform an insurance search for a fee. These companies scour records to find out if a life insurance policy exists. Use a search engine to search for "find lost life insurance" to find some of the companies that offer this service.

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