You might have considered what would happen if the customer loyalty program you are a member of suddenly ended or went under. You would probably be extremely frustrated, especially if you had amassed a large amount of rewards points over time and were left unable to use them.
However, have you considered that this same thing would happen if you were to suddenly die? Yes, it’s a rather morbid thought, but at the same time it raises an interesting question: Should customer loyalty program members treat their rewards balances as they would an inheritance?
According to a new study from Colloquy, a market research firm, certain loyalty programs, including Southwest Rapid Rewards and Hilton HHonors, have policies that do not allow points to be transferred after a member’s death. Other programs, including Citibank’s ThankYou Rewards and Best Western Rewards, do not clearly state in their policies what happens to reward balances after members die. This leaves the delicate issue in the hands of customer service representatives, who may have conflicting interpretations.
The question of what happens to rewards upon death is becoming a bigger issue as Americans join more programs and their balances get bigger. When a reward holder dies, he or she may leave behind balances that are essentially worth thousands of dollars in rewards. In 2011, outstanding loyalty points had a collective value of $50 billion by Colloquy’s estimates.
According to Colloquy, 76 percent of respondents in an April survey of 1,252 adults haven’t considered who would inherit their reward balances. Most reward members are probably not aware of the program’s policies regarding inheritance and transferring points upon death. If you are a reward member and have a pretty hefty balance, this is something you actually might want to look into. Different programs have different policies regarding this issue and some are rather complicated. For example, Marriott’s Rewards program only allows transfer of points to a spouse or domestic partner. Other programs allow heirs to redeem points, but not transfer them and a few more complex policies require estate executors to pay transfer fees or send in death certificates within a set time after the account holder dies.
BBB suggests that members with large balances start to chip away at their rewards while they are still alive and able to use them. This can also entail redeeming rewards for friends and loved ones to enjoy or even transferring them to a family member or friend. However, the one downside of transferring is that it often involves service fees which can add up to hundreds of dollars when shifting a considerable number of points. Also, make sure your spouse or children know your rewards account information so they can access it if something were to happen to you.
For more information on the most popular rewards programs’ inheritance policies, visit http://www.cnbc.com/id/101137308.