Things may not be the way you remember them
"We had a situation some time ago where a spouse died and the beneficiary [of an insurance policy] was the only child, who had predeceased the mother," Bill Scatolini, owner of Scatolini Insurance of Wilbraham told PRIME. "The husband thought he had a life policy on his wife and he was not the beneficiary."
Scatolini said he was able to help his client eventually recover the death benefit, but unfortunately the man still had to endure a "probate nightmare" and several months of correspondence with the insurance company before things were resolved.
And though this type of situation can happen, Scatolini said the worst offenders when it comes to neglected or misunderstood insurance policies are those that clients receive as an employee benefit.
"What I've seen in my time is that people have no idea what they have [for insurance] at work," he said. "We hear, 'I think I have this' or 'I think I have that' and the reality is, they had a brief overview [of the benefits] when they were going for the job, and then its never looked at again."
His advice: bring those work policies to an independent insurance agent for review, so you completely understand what that policy does and doesn't cover, how/to whom any benefits will be paid out, and what happens if you leave or get laid off.
"I'm 42 years old and I hear my peers say 'I'm all set, I've got four times or six times my value [through a work policy],'" Scatolini said. "But you're probably going to change jobs four to six times in your life, and that life insurance doesn't go with you."
He said, especially in today's economy, it's not only important to understand the policies you have, but to ensure that you have a small life policy that's separate from the insurance you get through your job.
Once you have such a policy, he said, you can always increase the value if you lose your work coverage.
"You may be in a job 20 years and get laid off and now you have no life insurance," he said. " And now, you may not be insurable because you have diabetes or cancer."