If you’re paying on a life insurance policy — or you’ve ever bought one — track it down and give your heirs complete information about it: Where the paperwork is, the policy number, the insurance company, the agent who sold it to you, etc.

Life insurance can be a powerful estate planning tool, but paying for it doesn’t necessarily guarantee your heirs will receive the benefit – not if the policy gets lost in the shuffle of life. Remember, your heirs may have to specifically approach the insurance company with their claim in order to receive any benefits. In fact, New York’s Attorney General’s office is investigating nine leading life insurers to see whether they have done enough to identify beneficiaries of life insurance policies. Do your heirs know the particulars of your life insurance, or where to find the paperwork?

As recently explained in Reuters Wealth online, life insurance companies have an inherent business interest in not paying out death benefits – it’s just simple economics.

You should have an inventory of your assets, and make that inventory available to your family. If you are paying on a life insurance policy, or you’ve ever bought one, track it down and give your heirs complete information about it, to include where the paperwork is now, the policy number, the insurance company, and the name and contact information of the agent who sold it to you.

Learn more about getting your legal and financial affairs in order in the November 2010 issue of our monthly estate planning newsletter, Are You Ready?

Reference: Reuters (July 5, 2011) “Life Insurance: Will Your Heirs Get What You’ve Paid For?”