Nothing can compare with the grief caused by the death of a loved one. For some survivors, the loss triggers a set of practical financial problems. They worry about how bills will get paid. Will they lose their home or move to a smaller, less expensive place? What about the children? How will they pay for their needs and even college? These practical concerns can be helped with life insurance benefits. Often, however, it is whether the survivors know there was a life insurance policy. Will they receive their benefits if they are not of the policy or policies?
Grieve in peace—we handle the rest. Our team locates lost policies, fights wrongful denials, and recovers unpaid claims. Free case review: (312) 766-1000.
Beneficiaries Unaware and Fail to Make a Claim
A series of articles in the Chicago Tribune has called attention to a real problem in the insurance industry. When beneficiaries of a life insurance policy are unaware they are insurance beneficiaries, they fail to request the death benefit. How can they request something they are unaware even exists? If no beneficiary makes a claim, the insurers quietly keep the money for themselves.
The Illinois Treasurer’s Office, over the objection of many insurers, instigated an investigation into unpaid life insurance benefits. According to the Chicago Tribune report, The Kemper Corporation, with three subsidiaries selling insurance policies in Illinois, refused to allow the audit and instead filed suit against the State of Illinois, alleging the State Treasurer exceeded his authority by even requesting the audit.
Insurers Must Make an Effort to Find Beneficiaries
As a result of the investigation and the audits conducted, the Governor signed a law effective January 1, 2017, that will require insurers to take steps to locate beneficiaries. Kemper is concerned that this law will interfere with the company’s claim process handling and have a “material adverse effect on the company’s profitability.” The State Treasurer was not concerned about Kemper, whose combined revenue in 2014 and 2015 equaled more than a billion dollars.
Findings of the Investigation
The Illinois Treasurer’s Office audited approximately 40 life insurance companies to see how many policies had never paid benefits after the insured’s death. The audit went back as far as 2011 and found more than $550 million in unpaid death benefits! Some insurers bank the money and then earn millions of dollars of interest, “which they then include into their profit margins.”
Even in cases where the insurer confirmed a person was deceased and “no longer eligible to receive that investment income” from an annuity, the company did not take the next natural step and pay the death benefit. When there was no beneficiary request, the company kept the money. No law or mechanism in place requires the insurers to locate beneficiaries. The burden was on the beneficiary to claim the benefit. Legislation has now been passed, and the bill has been signed into law to remedy this situation.
The Unclaimed Life Insurance Benefits Act
The Illinois Governor recently signed the Unclaimed Life Insurance Benefits Act, which will go into effect on January 1, 2017. This Act requires “insurers to, among other things, run semiannual checks against the Social Security Administration’s ‘death master file,’ which contains the records of deaths reported to the federal agency to determine if a policyholder has passed away and to notify beneficiaries how to make a claim.”
The assistance this new Act will provide is yet to be seen but is expected to benefit millions. For example, during the investigation, one woman was recently called by the Treasurer’s Office and told that the mother of two children she had been caring for were beneficiaries of their mother’s life insurance policy. Their mother had died in a 2007 car wreck, which the children had survived. The children are now young adults with learning disabilities. Their surrogate mother testified at a hearing dedicated to urging the passage of the Act that this beneficiary money for the two boys will go a long way in providing for their future.
The new law takes the burden of initiating a payment off the shoulders of an unknowing beneficiary and places it on the shoulders of the premium-collecting insurance company. As Illinois Treasurer Mike Frerichs said, “When people purchase a life insurance policy, they assume their loved ones will be paid out soon after their death.” Fair enough.
Understanding Unclaimed Life Insurance Benefits
Unclaimed life insurance benefits can present a complex challenge for beneficiaries. Understanding how to locate these benefits is why they often go unclaimed, and the steps necessary to claim them can help ensure that the deceased’s intentions are honored and that beneficiaries receive what they are entitled to.
Search Personal and Financial Records:
Begin by examining the deceased’s personal documents, such as bank statements, tax returns, and safe deposit boxes, for any indications of life insurance policies. Look for policy numbers, premium payment records, or communications from insurance companies.
Utilize Online Tools:
Use the National Association of Insurance Commissioners (NAIC) Life Insurance Policy Locator Service. This free tool helps beneficiaries locate policies by contacting participating insurers to check for policies in the deceased’s name[3].
Contact Former Employers and Financial Advisors:
Contact the deceased’s past employers or financial advisors, as they may have information about group life insurance policies or individual policies sold through workplace benefits.
Check State Unclaimed Property Databases:
If you suspect there may be unclaimed benefits, search your state’s unclaimed property database. The National Association of Unclaimed Property Administrators provides a tool to access these databases. Link to Illinois unclaimed property page.
Common Reasons Life Insurance Benefits Go Unclaimed
Lack of Awareness:
Beneficiaries may be unaware of the policy’s existence, especially if the policyholder did not communicate this information.
Outdated Information:
Incorrect or outdated beneficiary information can prevent insurance companies from locating the rightful recipients.
Policy Misplacement:
Important documents, such as the policy itself, may be misplaced or lost over time, making it difficult for beneficiaries to claim the benefits.
Insurer Unawareness:
Insurance companies may not be informed of the policyholder’s death, particularly if the family does not notify them or the policyholder’s records are not updated with the Social Security Administration’s Death Master File[2].
How to Locate Unclaimed Life Insurance Benefits
Steps to Claim Unclaimed Life Insurance Benefits
- Gather Necessary Documentation:
- Collect essential documents, including the death certificate, proof of identity, and any policy-related paperwork. This documentation is crucial for verifying the claim with the insurer.
- Contact the Insurance Company:
- Contact the insurance company for information about potential policies. Be prepared to provide proof of identity and the deceased’s death certificate.
- Complete Required Forms:
- Please carefully complete the insurer’s claim forms, ensuring all information is accurate and complete. Then, submit these forms and the necessary documentation to initiate the claim process.
- Follow Up and Await Approval:
- After submitting the claim, follow up with the insurance company to ensure all paperwork is processed. Once approved, the insurer will arrange to pay death benefits.
By understanding these aspects of unclaimed life insurance benefits, beneficiaries can take proactive steps to secure the funds they are entitled to, honoring the intentions of their deceased loved ones.
Our Attorneys Can Help Recover Your Life Insurance Claim
If you have recently lost a loved one, contact one of our attorneys at the Blumenshine Law Group. We will get all the relevant information from you and, with the help of the state Insurance Department’s Life Policy Locator Service, determine if a loved one named you as a beneficiary to a life insurance policy or annuity contract. Call or text us today at (312)766-1000 or email [email protected].