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Entries in Life Insurance (3)

Saturday
Jun222013

Dead Being Billed for Life Insurance

iStockphoto(SAN FRANCISCO) -- Life insurance for the dead? In a plot that might have been conceived by Fred MacMurray and George A. Romero, the nation's leading insurance companies continued billing customers for life insurance long after they were dead.

The companies--including such household names as AIG, Hartford, John Hancock, Met Life, Prudential, Transamerica and TIAA-CREF-- have agreed to a multi-state settlement under which they will repay some $763 million owed the heirs of the deceased.

Prime mover in the settlement has been Controller John Chiang of the State of California, whose citizens stand to get back as much as $87 million from 11 insurers.

California law requires a life insurer to pay death benefits to heirs within three years after the demise of the policyholder.

To keep tabs on which holders are alive and which are dead, insurers keep a so-called Death Master file, based on Social Security data. When a death is recorded in the file, insurers know not to expect payment of any further premiums. Most policies, however, put the onus on the beneficiary to file a claim for benefits, after the policy holder's death. Absent the filing of a claim, says Chiang's office, the insurer, prior to the settlement, could legally continue to draw down the policy's cash reserves, continuing to collect premium payments from the dead.

"Once the cash reserves were depleted," says a statement by Chiang's office, "the company would cancel the policy."

Audits by California found that insurers did not routinely cross-check the owners of dormant accounts with government databases listing the deceased. "In other cases," says Chiang's office, "companies had direct knowledge of the policy owner's death, but still did not notify the beneficiaries."

The 11 companies, as part of their settlement, admit no wrongdoing but have agreed to reform their practices.

"I am pleased that these 11 companies have come forward and agreed to do what is right by their clients," Chiang said in the statement announcing the settlement this week. "Too often, insurers have sidestepped their legal responsibility to make good on insurance policies purchased by their clients to provide peace of mind and financial security to their families."

The American Council of Life Insurers (ACLI), in a related statement, said it was pleased to have reached an agreement with California that "will result in greater numbers of beneficiaries receiving their life insurance benefits, and prompt escheating of funds to the states when heirs cannot be found. It is a positive outcome for all concerned." The vast majority of claims, says ACLI, are paid promptly in the normal course of business.

ABC News asked for further comment from several of the 11 companies but received a response only from ING, whose statement says in part:

"ING U.S. is pleased to have reached an agreement. The resolution is a great example of how the best interests of consumers can be met when the industry and regulators work together an find common ground."

Finding an unclaimed policy you may be entitled to isn't always easy, but there are some places to start. For people who died more than a few years ago, money may have already been turned over to the unclaimed property office of the state where the policy was issued. You can visit missingmoney.com, a website of the National Association of Unclaimed Property Administrators, to search records from 38 states and Canadian provinces.

Copyright 2013 ABC News Radio

Tuesday
Jul052011

NY AG Probing Life Insurance Payouts, Issues Subpoenas

Hemera Technologies/Thinkstock(NEW YORK) -- Some big life insurance firms are reportedly under investigation regarding payments on their policies.

Citing people familiar with the matter, the Wall Street Journal reports that New York Attorney General Eric Schneiderman has handed down subpoenas to at least nine leading insurance companies in an effort to find out whether they have done what they should to make sure policies of deceased customers are paid to beneficiaries.

New York's insurance department is also sending letters to more than 160 companies, urging them to run their lists of policyholders through a government database to find out if death benefits are overdue, according to the Journal.

This latest probe follows public hearings in California and Florida regarding the claims-payment issue.

Copyright 2011 ABC News Radio

Wednesday
Jan052011

$33 Million in Unclaimed Money for Veterans Dates Back to World Wars

Photo Courtesy - U.S. Department of Veterans Affairs (WASHINGTON) -- Veterans and their families may be eligible to receive unclaimed funds totaling about $33 million, according to the Department of Veterans Affairs.

Veterans' advocacy groups say many veterans' families have no idea the money is there.

"A life insurance policy could make a huge difference for the veteran's family, but only if they know who to contact and how to claim it," said Peg Bergeron, executive director of the American Military Retirees Association.

Unclaimed life-insurance policy payments, dividend checks and refunds -- about $33 million in all -- have accumulated since the beginning of the Veterans Affairs insurance programs in 1917.  The unclaimed payments can go up to $4,000, but are typically between $5 and $750, according to Thomas Lastowka, director for insurance for the Department of Veteran Affairs.

Lastowka said the amount is dependent on the premium that the solider chose to pay in the original policy, and cautioned that many families would not find they are eligible for funds.

About 25 million people have enrolled in the insurance programs since World War I, according to Lastowka.  The bulk of the unclaimed funds date from World War II, when about 22 million people enrolled.

He urged veterans' families to check if they are eligible through the Veterans Affairs website: https://insurance.va.gov/liability/ufsearch.htm.  Family members should have a veteran's name, date of birth, death and, if possible, the insurance policy number.

Lastowka said the website, which the department launched seven years ago, is the fastest method to determine if a family member is eligible for a payment.  There is also a toll-free phone number, 1-800-669-8477.

Copyright 2011 ABC News Radio







ABC News Radio