A Haunting Truth
A startling discovery reveals that life insurance companies have secretly avoided paying out billions of dollars worth of policies to unknowing families.
April 20, 2016
With age comes a little wisdom and you begin to realize you’re not going to live forever. Family becomes your priority and the all important life insurance policy premium finds its way into your monthly budget.
But what if that money never makes it to your family and you’re last gift ends up in the pockets of the same companies that promised you a peace of mind?
As originally reported here, dozens of life insurance companies have come under major federal scrutiny after a national task force investigation revealed that many were failing to pay unaware beneficiaries their just due. Though the representing industry trade association known as the American Council of Life Insurers claims that “most life insurers are going well beyond what the law requires to identify policy owners who have died and left unclaimed benefits”, 25 of the most prominent life insurance agencies have agreed to pay more than $7.5 billion in back-death benefits in a series of hushed settlements.
A number of startling revelations have emerged from this nation-wide probe. Perhaps one of the most unsettling facts is that this practice wasn’t merely used by a few rogue companies, but is rather a systematic industry-wide norm. Even more so, investigators discovered that there hundreds of thousands of policies that have gone unpaid even so far back as the 1960’s. Although the sheer number of unpaid policies speaks volumes on the reality of the situation, these incidents could perhaps be viewed simply as mistakes in a system to large to fully grasp.
However, the haunting truth remains that numerous companies failed to pay benefits despite having access to federal records indicating death of the policyholders or even explicit confirmation from the relatives of the deceased. In fact, if a beneficiary failed to come forward, some companies still continued to collect premiums by drawing money from the policies’ cash reserves – draining the policy of any worth. This method of operation could turn an investment of $20,000 over 50 years into more than a million dollars. Taking into account all the hundreds of thousands of “small” policies that went unpaid, there are estimates that the total amount of outstanding dues ranges into the billions.
Though the damage has been done, states are beginning to initiate sweeping requirements that ensure life insurance companies will be more forthcoming with providing families their due process in securing benefits. In Florida, for instance, laws will requires agencies to vigilantly monitor death records from the Social Security Administration to improve the prospect of a family obtaining the funds. Unclaimed money will be handed over to the state’s Unclaimed Property Program.
If you are interested in further investigating the possibility that you are the beneficiary of an unpaid policy that is being unlawfully withheld from you, contact your local state’s Unclaimed Property Program administration department. Also visit https://unclaimed.org/.
If you have any additional questions or simply need assistance with insurance claims and issues contact Millin & Millin at (956) 631-5600. Our compassion, dedication, and personal attention will get you the RESULTS you deserve.