A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

As I’ve previously reported, life insurance companies have been getting heat for not paying death benefits on unclaimed life insurance policies after the insured has become deceased.┬áThis has been a large-scale problem that involves an estimated $1 billion in total benefits.

The Wall Street Journal reports that insurers, feeling pressure from regulators and negative publicity, have recently begun paying death benefits on these policies. In New York there have been 1,209 persons who have received a total of $16.9 million in payments in recent months. The article describes how life insurance companies are now searching their customer databases and cross-matching them with Social Security death records, then reaching out to surviving family members for policies where a claim has not been made.

Insurance companies came under heavy criticism because they routinely searched death records to stop retirement and annuity benefits, but did not likewise conduct searches to determine if there were unpaid life insurance policies.

According to the article, fewer than 1% of policies are unclaimed after the insured dies. The unpaid policies disproportionately involve low and middle-income people who often purchase small value policies and do not use estate planning professionals to keep their affairs in order. While the largest payout has been in the amount of $673,485, the average in New York was about $14,000. Still, the money adds up.

After New York insurance regulators began to investigate insurance company procedures, they stepped up their efforts to locate beneficiaries of unclaimed policies. Benjamin Lawsky, superintendent of the New York Department of Financial Services, was quoted as saying:

The burden on the companies for running a computer match does not seem that great, and the benefit to consumers is significant.

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