State insurance regulators question whether insurers are paying out all promised benefits to people's heirs. It is a good idea to consider how your life insurance beneficiaries will interact with your life insurance provider as part of a comprehensive estate planning conversation.

Owners of life insurance pay premiums for years with the expectation that their family's future will be secure when they die. Yet insurance regulators in some states question whether all companies pay policy benefits, even when they know the insured has passed away.

There are also concerns as to whether the companies are holding onto unclaimed life insurance proceeds. Benefits, if not claimed by a relative or other beneficiary, are mandated to be turned over to the state, where government agencies make the existence of such unclaimed assets a matter of public record.

Insurers argue that they are doing a good job of paying the survivors of the insured. The companies average a daily $1.6 billion in policy proceeds payouts.

Policyholders can take steps to make it more likely that beneficiaries will claim their life insurance benefits when they die. The first step is to tell beneficiaries that the policy exists. It may be useful to ensure that someone you trust has copies of the policies and knows what steps to take in order to ensure that your beneficiaries receive all that they are entitled to.

Insurers often lose track of policyholders who fully paid up an insurance policy. Such policyholders may move, and the insurer is not in regular contact with them because no premium notices are sent.

In filling out insurance forms naming a beneficiary, it is necessary to be specific. Many people may have the same name as the beneficiary named. One way around this is to give the insurance company the addresses, Social Security numbers, and other identifying information for beneficiaries. This helps guarantee that the insurer will be able to find and contact them.

Source: Kiplinger "Will Your Life Insurer Pay Promised Benefits?" Eleanor Laise, July 27, 2011