When someone passes away and they had a life insurance policy, there are two common scenarios as to how it will be paid out. If a life insurance policy has been established to be part of the “estate,” the amount left over after all the bills are paid forms part of the estate’s overall value. Executors are obligated to inform all beneficiaries of a will.
In the second scenario, life insurance is paid directly to beneficiaries, outside of the estate. This type of payment tends to happen relatively quickly.
It is not uncommon for life insurance policies to seemingly go missing, however. There may be a policy that is not specifically mentioned in a will, but someone has been told to expect a payment. It’s hard to know where to start looking, but thankfully there are resources to help find these seemingly “lost” life insurance policies.
Where to start looking
Handling an estate after someone passes away is difficult work. Executors have a lot of responsibility on their shoulders, and the process is often long and difficult. The importance of a carefully written will that has been thoroughly checked by a wills and estate lawyer (or someone with a great deal of experience in the field), cannot be overstated.
In an ideal world, beneficiaries of life insurance policies should have been made aware of the insurance company, policy number, and contact information. A copy of the death certificate will be necessary to file a claim.
This doesn’t always happen, though. To find a lost life insurance policy, the OmbudService for Life & Health Insurance (OLHI) is a free and independent service representing nearly all Canadian life insurance policies – 99%, according to its website. The OLHI also offers life and health insurance dispute resolution services.
The OLHI provides a number of handy tips for searching for a lost life insurance policy, including how to try to do it yourself to start.
- Look for the paper files.
- Search banking information for the premium payments.
- Ask their lawyer and/or accountant, who may have a copy of the deceased’s policy information.
- Members of professional associations, such as those for engineers, lawyers, accountants, teachers, government employees, etc., may have purchased a policy through them.
- Credit cards companies often provide life insurance policies.
If even after all that investigation, the lost life insurance policy still hasn’t turned up, submit a request for a policy search through the OLHI website.
Different types of life insurance
Life insurance is low-cost way to ensure the major expenses that come with death are covered and to leave a little bit of a nest egg behind for your loved ones.
In Canada, the most common types of life insurance are permanent and term policies. Permanent life insurance policies are purchased for an indefinite period of time and come with a cash value, providing your beneficiaries with a tax-free payment when you pass away. Permanent life insurance policies are often provided through workplaces, banks, and credit cards, and can be purchased directly through insurance brokerages and companies.
Term life insurance is less common. Coverage provides a death benefit if the insured dies within a specific “term” (usually 10 or 20 years), and/or before a certain age (such as 65 years old). If the person covered doesn’t pass away within the term or by the determined age, benefits are not paid out. There is no cash value to a term insurance policy, making it more of an option for additional coverage, not as sole coverage. Term life insurance usually can be converted to permanent life insurance at any time.
The amount your beneficiaries will receive upon your death depends on the type of policy you have and the amount you have put into it. Generally speaking, your beneficiaries may receive their payments in a lump sum, in installments, or in annuities or shared assets accounts.
Insurance brokerages such as us at Lane’s are able to offer a range of whole and universal life insurance policies, including those that do not require medical exams.
Contact Lane’s for all your insurance needs
Lane’s Insurance is a leading Alberta-based brokerage providing a comprehensive range of competitively priced personal, home and business insurance products offered through the province’s top carriers. Contact at our Calgary, Edmonton, Banff and greater Alberta offices.
