Does Your Family Know Where Your Life Insurance Policies Are?


I realize that this may sound like a ridiculous question at fist glance, but it’s one that brings up a potentially disastrous situation. Having life insurance does no one any good if your beneficiaries don’t know where your life insurance policies are.

Speed of access to life insurance proceeds will be a critical factor, especially in households where financial resources are tight. In fact, there are at least two outcomes that you need to be aware of in this situation:

  1. The inability to locate a policy could cause a delay that results in a substantial financial burden to your loved ones at a very critical time, and
  2. The potential is real that a policy is not even known to exist, which can be the equivalent of having no policy at all.

How can a family not know where your life insurance policies are? It’s actually easier than you think.

Most of Us Don’t Like to Discuss the Prospect of Our Own Death

As a rule, death is not exactly suitable dinner discussion. In fact, most of us don’t like to discuss the prospect of our own deaths at all. In modern culture, with people living longer than ever, death is often the remotest of topics.

If we are reluctant to discuss the prospect of our own death, it follows that the topic of life insurance will also never come up.

No, you don’t want to dwell on death as a topic. But it’s important to understand that there are financial consequences if you fail to discuss at least the financial aspects of your passing. Never talking about it means that your family members will never be reminded of what to do in the event it does happen.

The Existence of Life Insurance Might Make Us Feel That “Everything Is Taken Care Of”

This is where habit can actually cause a problem for your family at a very critical time. You buy a life insurance policy, you get all of your financial affairs in order, and then you go about your business and forget about your final preparations.

It’s entirely normal – no one wants to dwell on the prospect of their own death. Once everything is taken care of, you rely on exactly that – that everything is taken care of, and there is no need to discuss it on a regular basis.

Yes, everything is taken care of, but your family is never apprised of the provisions that you made, or of the life insurance policies that you provided.

Out of Sight, Out of Mind…

Perhaps when you set up your life insurance policy, you are completely open and upfront with your family about what you had done and the provisions that you had made for them. But time passes, and you and everybody else are too busy with life, and the topic never comes up again.

As time goes by, and years pass, no one remembers the original discussion of final arrangements, nor do they even think it’s important. It’s simply forgotten because it’s out of sight.

Specific Storage Locations Can Be Forgotten Over Time

It’s typical for people to store important documents in either safe or remote locations. A safe deposit box at the bank is a typical location for various insurance policies, including life insurance. This makes sense – in the event your home is destroyed by fire or some other disaster, you would want to be sure that critical documents like life insurance policies are stored in safe locations.

The problem is that safe and remote storage sites can easily be forgotten by your family members. This can be especially likely in the event you have a prolonged illness that precedes your death. Your family may be so caught up in providing for your care and worrying about the outcome that they simply forget where a life insurance policy is stored.

Life Insurance Policies Can Be Forgotten Over Time

Buying life insurance is hardly an annual event in most households. You might buy a policy only once every decade or so. It is entirely possible that the existence of such a policy can be completely forgotten, especially by the beneficiaries.

And believe it or not, this outcome is even more likely in an age of automatic bill payments. If your life insurance is being paid for out of automatic drafts from your bank account or credit card, no one may even be aware that the policy exists. After all, it’s all happening quietly and out of sight.

This isn’t to say that the policy wouldn’t be discovered sooner or later. But it is to say that it may not be found until well after the fact, when your loved ones have endured a significant financial burden simply because they did not know either where a policy was located, or that it even existed at all.

Ways to Avoid a Missing or Forgotten Life Insurance Policy

Now that you realize how easy it is for your family to not know where your life insurance policies are, you should consider implementing the following procedures to prevent that outcome from ever happening:

  • Make a point to discuss the existence and location of all life insurance policies at least once a year – circle the date on your calendar if need be.
  • Have a list of each policy that you have on each person in the family, and include the amount, the term, the insurance company, the policy number and the contact phone number, and keep it in a safe but easily accessible place.
  • If you store your policies remotely, such as in a bank safe deposit box, keep a copy of the declarations page somewhere at home that your family knows about.
  • The death of a family member can be a very confusing time; it’s often a good idea to let a trusted family friend know about your policies, that way he or she can provide direction.

In the event of your death, life insurance will be the final and most valuable gift you will give to your family. But it will do them little good if they don’t know where it is, or even if it exists at all. Don’t miss this critical step!