I had an interesting email question yesterday concerning whether or not there is a time limit on filing a claim for life insurance. There are plenty of stories out there about old stock being found and old life insurance policies turning up.
In this case the son who called me isn’t even sure if his father had private pilot life insurance through AOPA, (Aircraft Owners and Pilots Association). But, he said, knowing his father, an executive of one of the largest companies back in the 1960′s, and the other ways he took care of the family he would be surprised if his father, a long time member of the AOPA , would not have taken advantage of their group life insurance offerings. And he has confirmed that his father was an active member of AOPA at the time of his death.
His father died back in 1967, and because no one found a policy there was no claim filed with AOPA. In 1992 after much family discussion they decided to at least check with AOPA and see if there had been life insurance in force. When the son called he was told that yes, his father was a member back then. When he asked about life insurance he was told that it would be too late to file a claim even if there had been a policy. She was, in effect, saying that life insurance claims have a statute of limitations.
That was a patently untrue statement. I have to believe the statement was made out of ignorance rather than an attempt to keep from having to pay a claim because the person he talked to was at the administrative level. There is no limitation on the filing of death claims for good reason. In fact, even if a life insurance company goes out of business they have to put funds in receivership to pay claims that will be filed even though they aren’t in business anymore. In many states if those funds fall short of paying the full death benefit, the state has a pool to pay additional money toward making the family whole on the policy. Policies get lost. People get divorced and don’t change beneficiaries and any number of things can happen to prevent a timely filing of a claim.
While I truly don’t want to get in the business of tracking down old insurance claims, it’s important for people to know that if there is a policy and it was in force at the time of death and they can produce a death certificate, the company will pay. And they won’t just pay the death benefit of, say $100,000, they have to pay interest on the death benefit from the date of death. Even better, they have to pay the interest as it was stated as their current interest in each year since the death. In the case above with the death in the 60′s, there have been times of inflation when those companies current interest rates would have been in double digits.
In the past I have given he advice that, no matter what the circumstances, file a claim. Don’t ever assume a company won’t pay. Even if the insured died while committing a crime or died by suicide or died in prison, if there was insurance in force you should file the claim. If you don’t know if it was in force, still file a claim. If you have good reason to believe the policy had lapsed, still file a claim. Policy lapses are not always the fault of the insured and if it was an error on the part of the company then they have to treat it as though the policy was in force.
Bottom line. There is no policy too old or cause of death too strange that you should not pursue a claim. I said I don’t want to get in the business of tracking down old claims, but in the case of the family above, I’ve already told them I’ll help because they were given bad information back in 1992. If you have any questions, please call or email me directly. Let’s talk.