Silly insurance companies, forgetting to pay off policies owned by beneficiaries of dead policyholders. Good thing state governments are there to help refresh their memories.
The New York state government has led the way in an effort for states to crack down on insurance companies that owe millions of dollars to thousands of policyholders. According to New York’s Department of Financial Services, the state’s efforts to push insurers to double-check their records have led to payouts of $52.6 million.
The Wall Street Journal reports 10 other states are following suit, forming a task force that could settle with three insurance firms within weeks.
According to regulators, insurance companies aren’t so great at following up with dead customers to pay out benefits, too often leaving it up to next of kin or other beneficiaries to file claims to collect the money that’s owed them. The industry practice has apparently allowed thousands of claims to slip through the cracks.
The lesson here is that, when estate planning, it’s important to make your will, insurance policies and financial documents accessible to your next of kin. Also, those who have lost loved ones should be proactive when dealing with companies that insured the departed.
Bring Out Your Dead: Push Pays Off for Policyholders [The Wall Street Journal]