You’ll never hear an insurance salesman brag about this, but a life insurance payment doesn’t always come to the beneficiaries promptly.
It usually does — about two weeks after filing a claim is typical. But if a person’s death isn’t typical and how someone died is complicated, life insurance can get complicated as well. Of course, the obvious question then is — what’s difficult to comprehend? After all, if somebody dies, isn’t that pretty darn obvious? And so what should hold up a life insurance payment? And who can I blame? Or maybe slug?
Paperwork. And bureaucracy, red tape that usually has nothing to do with the life insurance industry but everything else that swirls around it, I’d like to point out. Don’t slug me.
It isn’t fair, but while we may live in a digital world, or so it seems, everything in the financial world tends to come to a standstill if the proper paperwork isn’t completed. And what might cause a paperwork stoppage? Let us count the ways, and then I’ll offer up a lukewarm pep talk.
Blame your medical examiner. Not right away, of course. Your state or city’s medical examiner may be a swell guy or gal; and, hey, if you’re ever on Netflix, you may want to check out Quincy, M.D., the 1970’s series about the medical examiner who solved crimes. Kind of dated by today’s standards, but still a fun show.
For the most part, medical examiners — or depending on your city or town, you might refer to them as the coroner — are rarely to blame. But if a medical examiner can’t determine the cause of a loved one’s death, that holds up the death certificate being issued, and if the death certificate is held up, that holds up the insurance payout.
It has been happening in Massachusetts. The media has reporting that the medical examiner’s office is behind on thousands of autopsy reports, some reports as old as three years old.
The National Association of Medical Examiners, incidentally, recommends that medical examiners have 90 percent of autopsy reports completed within 90 days. So while two weeks is the norm, everyone should — in theory — have received their payout well under two months.
And, sure, 100 percent of autopsy reports finished in 90 days or under would be nice, but there are always going to be questions about some people’s deaths.
Your state crime lab may be the problem. For much of the first decade in the 2000’s, there was a backlog of criminal cases at the state lab in Wisconsin, which led to plenty of problems, including delayed life insurance payouts. And last year, Georgia was experiencing similar problems. And right now, North Carolina’s state crime lab has a backlog of cases due to a shortage of funding for DNA analysts and scientists who test blood in drunken driving cases. The articles I’ve read haven’t indicated if the backlog has actually delayed life insurance claims, but one would think that if there’s a backlog — even just in the drunken driving cases — that that might be affecting other cases in North Carolina.
The body might be missing. I wrote about this unpleasant scenario fairly recently. You could perish in an avalanche, mudslide, drown in the ocean or disappear one night after you forget to make a payment to your loan shark. Not only would this be a terrible outcome for you, it’s a rotten outcome for your family. If your body isn’t found, your loved ones might have to wait for years before a judge decides that you aren’t playing an extreme game of hide and seek and that, yes, you’re no more, and your beneficiaries deserve the money that your insurance policy promises them. So be careful out there, and please, no taking out loans from loan sharks.
You may have made an ill-informed decision. Like leaving your money to a minor. It may make perfect sense, especially if you are, say, divorced, to make your children the beneficiaries. You want to protect your kids if anything happens to them. But if they’re actually children, you can’t leave a life insurance payout for them to manage. I don’t know of a state in the country that actually allows that — you can, however, put the money into a trust or have the payout go to a designated adult to manage the money for your kids.
So what you don’t want to do is leave half a million dollars to your 9 and 11 year olds, figuring that’ll do them just fine if something goes wrong. Besides, you’re probably thinking, I’m not planning on checking out for a long, long time — and then, the next day, you absent-mindedly light a match while pumping gas.
If something like that happens, your kids won’t get that half a million until they’re 18 or 21, depending upon the state you live in. Talk about a delay. Yikes.
The lukewarm pep talk. There isn’t much an individual can do if he or she is waiting for an insurance payout that’s been delayed due to unforeseen circumstances. To the best of my knowledge, there isn’t (yet) insurance to protect you if your life insurance policy runs into red tape. See, I warned you that this wouldn’t be the most uplifting pep talk.
I’m guessing the Jurgen Klinsmann, the coach for the U.S. soccer team, didn’t gather the teammates before the big game against Belgium and say, “Hey, there’s not much you can do…”
But, look, I’m just trying to keep it real. There are strategies that you can try — and you should — and they probably will work. But you need to be patient.
If your loved one’s insurance money is stuck somewhere, bug the heck out of the medical examiner’s office, the state crime lab, city hall and wherever else you need to — try your Senator or state representative — to get things moving in your favor. You can report your troubles to the local media; some enterprising reporter may be interested on doing a story, especially if they get the sense that you’re just one of an army of people in the same predicament. Complain on Twitter and Facebook. You could also set up a web site or blog for other people in your situation and attract attention that way. And, of course, contact your insurance agent and insurer or state insurance commission office and see what they recommend.
The goal, of course, is to put enough pressure on whatever or whoever is holding things up that, just to make sure you go away, they do what they need to do, and you get your money far sooner than you otherwise would have.
The squeaky wheel gets the grease, as they say. In the meantime, if nothing else, when you’re feeling discourage, remind yourself of this — your loved one didn’t intend for this to happen. He or she did a wonderful thing by taking out a policy and leaving you money. As maddening as it may be, if you have a large life insurance payment in limbo, it’s still better than not having one at all.
It’s important to be familiar with, from the beginning, what the underwriting process looks like and what underwriters are looking for.
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