Unclaimed and Unpaid Life Insurance PoliciesPosted May 27, 2016
Earlier this year, Consumer Reports conducted an investigation into lost, forgotten, or unknown life insurance policies. It estimates that currently, there is at least $1 billion in unclaimed life insurance benefits. The average unclaimed life insurance benefit is only $2,000, but payouts have been as high as $300,000.
Insurance companies do not always search for beneficiaries when a policyholder dies. Rather, despite the fact that companies have access to federal death records, they often delay paying out benefits until a beneficiary makes a claim.
Some companies have withheld benefits when a relative directly confirms to the insurance company that a policyholder has died. There have even been reports of insurers continuing to collect premiums after the policyholder has died and ceased paying, by withdrawing money from the cash reserves of the policy. The insurer then cancels the policy when the reserves are exhausted.
A multi-state task force has investigated the problem of unclaimed life insurance policies, and six large companies, AIG, MetLife, Forethought, Nationwide, Prudential, and John Hancock, have come to a solution. They have agreed to use the Social Security Administration’s Death Master File to search for beneficiaries, and, if they cannot locate any, to turn payouts over to the state’s unclaimed property office.
Ken Miller, the Oklahoma treasurer, says that around 35 insurance companies still have not settled. He estimates that there is up to $3 billion more in unclaimed policies throughout the country.
Sherry Sanders is an Oklahoma resident affected by this issue. She was unaware of her husband’s life insurance policy until last year when she got a $22,000 check in a settlement. Treasurer Miller notes that, because of the time value of money, she lost a significant amount of income that she could have earned on the policy payout. Invested at an eight percent return, $22,000 becomes, after 50 years, $1.2 million.
Recovering Lost Policies
Those who suspect that a relative may have left a life insurance policy have several options. They may check with the state unclaimed property office, where the insurer may have turned over the benefits. They may also contact the insurance company directly and inquire about a possible policy’s existence. Potential beneficiaries may also examine the deceased’s personal records, contact former employers or labor unions, open safe deposit boxes, and search banking records for premium payments.
If you suspect that a deceased loved one has left a life insurance policy, an Oklahoma bad faith insurance attorney can help you collect. Please contact our legal team at the Bennett Law Firm, at 405-272-0303, for a free initial consultation.