Though buying life insurance is certainly an important first step, consumers need to ensure they keep up on their policy over the years.
Experts told Reuters it's not uncommon for a policyholder to forget they have a life insurance policy - or which company they took one out with - years down the road, making it difficult for their beneficiaries to obtain their rightful money after their death. Insurance expert James Hunt, of the Consumer Federation of America, told the source some might only remember their insurance agent's name while others may have simply forgot they had the policy because they'd paid the premium balance in full.
Consumers are advised to keep a written inventory of their policy particulars, and to keep their family members informed.
"Of course everyone should do that, just like everyone should have a will and keep their Individual Retirement Account beneficiaries up to date and so on and so forth. Responsible people should do that, but of course, everyone does not do that," Hunt said.
States have recently been investigating incidents in which beneficiaries were unaware their loved one had a life insurance policy, and when the company itself was not aware the policyholder had passed away.