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Life Insurance Companies Pressed to Locate Beneficiaries | cialis online

Life Insurance Companies Pressed to Locate Beneficiaries

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Life insurers are being pressed to locate beneficiaries after state regulators estimated that over many, many years, insurers have not paid at least $1 billion in death benefits. The issue? Insurers believe it is the beneficiaries’ responsibility to file claims following deaths.

For over a century, death benefits were prompted only when a beneficiary filed a claim; should a claim not be made, the insurer usually maintained the policy until the insured would be at least 95 years of age. At that point, the insurer would attempt to contact the policy owner and, if unsuccessful, the policy, death benefit, and mandated interest would be sent to a state unclaimed property unit after a one-to-five year “dormancy period,” explained The Wall Street Journal. Policy owners are sought by states via web site postings; however states can use proceeds on open claims.

As we’ve explained, insurers are supposed to pay death benefits once they learn a policyholder has died. If they are unable to find a beneficiary, most states require that benefits be turned over to their unclaimed property funds.

Now, some insurers will have to routinely check the Social Security death database to learn if policyholders have died and, if so, attempt to locate beneficiaries. If beneficiaries cannot be located, funds will be remitted as unclaimed property to the states, said The Journal.

MetLife, Prudential Financial, and Manulife Financial’s John Hancock unit, said The Journal, are in deals with dozens of states in which insurers must regularly review policyholder lists against a death database and work to locate the survivors of those whose death information is located.

At least eight other insurers—American International Group Inc., Lincoln National Corp., Nationwide Financial Services Inc., and others—are being looked at by a multi-state task force; a settlement could take place this week, said people familiar with the probes, according to The Journal. AIG declined to comment. Nationwide told The Journal it “has been cooperating fully with the states’ regulators” and “will continue to do so in hopes of resolving their concerns.” Lincoln told The Journal that it is cooperating and has “always viewed paying all legitimate claims to our clients in a timely fashion as a matter of utmost importance.”

Typically, life insurance policy language states that beneficiaries must advise insurers of an insured’s death; however, more-and-more, firms are avoiding that argument over public relations issues and given easy-to-access database technology, noted The Journal.

Investigators in several states have launched probes under the belief that life companies are aware of the death of policyholders when they check the Social Security Administration’s Death Master database, but knowingly suppress their awareness.

As we’ve written, it is difficult for insurers to deny the requirement to review the database as these same insurers have no problem using the Social Security Administration’s Death Master information to their benefit, such when as stopping payments to deceased annuitants.

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