Why Decades-Old Life-Insurance Benefits May Still Go Unpaid

via Wall Street Journal

Some life insurers are fighting back against state officials who insist it is the companies’ job to check for dead customers.

The battle, led by small and midsize insurers, is reviving a touchy debate: When a policyholder dies, is it up to the insurance company or the beneficiary to make sure the benefit gets paid?

Historically, the burden has been on beneficiaries to file a claim after a death. Although that is still the typical way death benefits get paid, state authorities in the late 2000s began to compel insurers to turn over policyholder rosters so they could be checked against death databases.

Most large insurers agreed to the audits even though they believed the law didn’t require such extensive efforts. They decided that it wasn’t worth the reputational risk to fight the matter, and that new computer software made the change a logical one. Many were, in fact, already using similar checks to identify dead annuity owners in order to discontinue these customers’ payments.

Read the full article here

About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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