However, according to a new study completed by a task force of the National Association of Insurance Commissioners, joined by three state insurance departments, many insurance companies are not paying out the money. In fact, they are not even attempting to locate the family members or other beneficiaries of the deceased.

This isn’t simply a small issue in the world of life insurance. At least a dozen large, well known companies are being investigated for failing to pay out over $1 billion in death benefits on literally thousands of small policies.

The bulk of these small policies were purchased during the 1950s, and the insurance companies are now pleading ignorance while keeping the cash in their pocket.

In many cases with life insurance, the beneficiary of the policy does not know he or she has been named. After the insurance company receives the report of death, it is supposed to be their job to locate the beneficiary and to pay the money out. It is becoming quite clear that many companies are avoiding this. And whether they’re purposefully doing it to keep more money or not, the end result is that they’re keeping more money.

Avoiding this Insurance Trap

If you’re currently thinking about taking out a life insurance policy or if you already have one, it is very important that you notify the beneficiaries that they are going to be receiving the money should you pass on. Relying on the insurance company to do it is not the smart move. Even reputable companies can get their information wrong or allow a file to slip to the back of the pile.

By alerting any beneficiary of the policy, they are able to contact the insurance company upon your passing to handle anything the company may not be so willing to.

Insurance companies seem to do okay with larger policies. Any policy over 50 thousand usually makes it out to the beneficiary. But that’s due to the long process the insurance companies go through to ensure that the deceased is qualified to receive the benefits. They receive autopsy reports and make sure that there’s no suicide or foul play.

For small policies, however, the process is much more streamlined; as long as the death isn’t ruled a suicide, the money should be mailed out immediately.

If you’re hoping that the beneficiaries receive the money as they should, make sure you take care of things before the unthinkable happens. Give the beneficiary of the policy the contact information of the insurance company in order to avoid any hassle.

Women have long been said to possess more reasoning skills than men – they’re the more rational gender. And according to a study released by the American Association for Long-Term Care Insurance recently, women have been purchasing policies in large numbers, showing that, especially in tough economic times, the fairer gender plans ahead.

Suring Numbers Revitalize Industry and Help Everyone

According to a release on May 31, 2001, sales of life insurance policies in 2010, offering long-term care benefits, surged 79% among the industry’s leading insurance providers. Of this big surge, the American Association for Long-Term Care Insurance stated that women comprised over 60% of all policy owners in 2010.

When most people think of life insurance, their mind immediately turns to receiving a check upon the death of a loved one. The money is used to cover expenses and to provide a little bit of security. That’s the mental picture most of us draw.

However, with long-term care life insurance packages, what we’re talking about here is a different type of insurance entire. LTC insurance is not the typical life insurance policy; it is more of a health insurance hybrid, wherein people who cannot care for themselves are taken care of on the monetary side. LTC policies are for people who have trouble with day-to-day activities, such as bathing, dressing, continence, etc.

As you may imagine, these packages are more expensive than simple life insurance policies, as the insurer is bound to pay out more money for long-term care expenses. However, the surge shows that more people are looking toward the future and are making preparations should they become unable to care for themselves or for their loved ones.

With leading industry insurance providers doing well, the surge benefits everyone. Insurers will actually drop rates on upswings and will not deny as many policies. With more money coming in, their risks lower, and thus more people can become insured.

The biggest point taken from these numbers is that life and long-term care insurance policies are actually more affordable now and easier to come by. If you have been waiting for the right time to find a good life insurance policy, now’s the time to act.

Knowing that one should have a policy in place to cover funeral expenses and to help loved ones move on leads some individuals to purchase bad policies. When you are broached with the topic and those wheels in your mind start turning, your first thought may be to purchase the first policy you see. Before you rush to get insurance, however, you should know exactly what you’re buying.

Armed with the right amount of knowledge about life insurance in general, you can make an informed decision that will save you a lot of money while you’re still here and not affect the amount your family earns after you pass.

Realize what you need

By understanding what you need, as in your fiscal situation after you’re gone, you will make a better decision about exactly what type of policy you receive. The key word here is “you.” You should focus on the type of coverage you need. Do not let anyone else tell you what type of coverage you need. It’s true that this insurance is for them, but their wants might end up costing a lot of money on monthly premiums that doesn’t even pay out in the end.

Speak with a Broker

By speaking with a broker about your options and about the various types of insurance out there, you will understand the differences in term policies and policies that cover your entire life. Brokers have more access to information than you do, and they are skilled in the field.

Do not Invest

Some people make the mistake in believing that life insurance is about “investing” in a care package after death. This is not the case. Approaching life insurance like this will inevitably cost too much money for very little return. Life insurance is about protection; it is not an investment, so a term plan will do just fine.

Always Ask Questions

Whether you’re speaking to a broker or your insurance advisor, there is no such thing as a tough question. Do not be afraid to ask all the questions you want. You need to know about the product and how your loved ones will benefit before you begin to pay a premium. Find out about renewals, cancellation, any after-death hold-ups for accidents or illness, and other questions pertinent to the subject.

Find a plan that covers you well and that you are comfortable with. You do not need a stout package here; you just need ample protection for your family.