When it comes to receiving life insurance benefits after a family member or significant other has died, most people are unprepared to collect, and younger generations are the least prepared, according to a new survey by the National Association of Insurance Commissioners (NAIC).

As a result, tens of millions of dollars in life insurance benefits go unclaimed every year because beneficiaries lack basic knowledge about the existence of a loved one’s policies and benefits, the group said.

"There is a life insurance preparation gap, and it's not the buyer who's unprepared—it's the beneficiary," said Ray Farmer, the president of NAIC and also the director of the South Carolina Department of Insurance.

Overall, just 39% of baby boomers surveyed (those ages 56 to 74) say they feel prepared to fulfill their roles as life insurance beneficiaries.

And that figure drops off significantly among younger beneficiaries, the survey found. Just 30% of millennials (those age 24 to 39) say they feel equipped, and the number is only 22% for Gen Zers (those age 18 to 23).

"There's clearly a need for better communication between policyholders and beneficiaries, especially when that beneficiary is younger and less familiar with the process,” Farmer said.

Half of all those surveyed said they are listed as a beneficiary on a friend’s or relative's life insurance policy. But some people don't know: 21% of Gen Zers and 20% of millennials said they didn’t know whether they were named on somebody’s policy.

"Knowing you're the beneficiary is just the start. Information about the policy and coverage is important," Farmer said. "It's helpful to think of it in three parts: who, what and where. Who is the carrier? What is the benefit amount? Where is the policy stored? Having this basic information will save time and help to ensure the benefits are paid."

When it comes to knowing basic policy information, there were also pronounced generational differences, the survey found.

Just 23% of Gen Z beneficiaries know where a family member’s or significant other’s policy is kept, while 29% of millennials and 41% of baby boomers do.

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