“Life insurance sales has a very high revolving door,” said Michael Hartmann, an agent with Allstate.
“I always try to tell agents they may not be around in 40 years when the beneficiaries need to get hold of them. Yes, it is a good idea to keep contact with your clients, however if the agent leaves the business, are they 100 per cent sure their client will be taken care of.”
Recent numbers have shed light on how big a problem unclaimed life insurance is in Canada and the United States, with billions of dollars left on the table by consumers.
In most cases insurers are not required insurers to look for beneficiaries of unclaimed life insurance – the onus is on the consumer.
Given the increasing amount of unclaimed life insurance in Canada and the United States it’s all too easy for documents to go missing or a beneficiary not to know about a policy in the first place.
“I couldn’t beat this enough into people’s heads, make sure the person writes it down on a piece of paper and shows their beneficiary and tells them it’s here and they know the company name,” said Hartmann.
The absolute least an advisor needs to do is make sure the beneficiary knows the name of the company where the insurance was bought; without that finding a policy can be like looking for a needle in a haystack.
“It’s important for advisors to tell clients to really try and keep any kind of paperwork that they have,” said Andrea Zviedris a spokesperson for the OLHI.
Advisors can help clients keep track of their policy by making sure they know to:
- Keep policy information accessible
- Have the beneficiary present when discussing the policy
- Make sure the family has a financial conversation before it’s too late
Case in point for Hartmann was when his wife, also an advisor, left the industry to pursue another career.
“Her book of business was given to another agent,” he said. “Around two years later she saw a few clients of hers in the area. They did not even know she left even though she sent out personal letters to them all. The agent that took them over did not contact them to introduce himself as he was busy and could not get around to it. This could happen to anyone.”
It’s estimated that over $1 billion in life insurance is waiting to be claimed by beneficiaries in the United States. North of the border, experts estimate unclaimed assets – including life insurance policies – across the country could top $4 billion to $7 billion.
“They say over 25 per cent of life insurance policies go unclaimed, it could be over 50,” said Hartmann. “There are over 250 million people in the US alone with life insurance, that’s a huge number.”
It’s difficult to pinpoint a dollar figure for solely life insurance because Canada is way behind other developed countries in having comprehensive unclaimed property legislation for all its residents.
Alberta and Quebec are the only provinces with comprehensive laws, while British Columbia has a voluntary system. Ontario is looking into adopting a system.
In Canada, the OmbudService for Life and Health Insurance did a total of 147 searches, finding 65 unclaimed policies in 2013. Last year they did 186 searches, retrieving 93 policies.
The relatively short lifespan of the insurance advisor may be part of the reason for a staggering number of unclaimed life insurance policies.