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States taking a stand against life insurance providers neglecting to pay benefitsPosted On Tue, July 26, 2011
States across the country are investigating life insurance providers and the claims that millions, if not billions of dollars remain unpaid to beneficiaries of policyholders who have died.
After a policyholder passes away, insurance companies normally require beneficiaries to make claims for the benefits. Many times, however, beneficiaries are unaware that they're entitled funds or aren't aware which company holds the life insurance policy. Critics assert that the current status quo isn't fair to families who have had a family member pay life insurance rates and then end up not receiving benefits.
In New York State, the Insurance Department has requested that insurers within the state begin "to use a reliable death list to identify those cases and pay beneficiaries," said spokesperson David Neustadt. Right now, this is simply a request, but the department is expected to work on making it a command.
Such a list already exists in the Death Master, a comprehensive database of deceased Americans maintained by the Social Security Administration.
James H. Hunt, the former Insurance Commissioner of Vermont, praised New York's movement. He said, "If New York adopts a working regulation, other states will follow and/or insurers will voluntarily use a list."
Only roughly 44 percent of U.S. households have individual life insurance, according to LIMRA International, a 50-year low. Average life insurance premiums reportedly fell 16 percent in 2010.
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