New York Passed New Rules Directing Insurers to Pay Unclaimed Life Insurance Proceeds
New York is the first state to legislate Life Insurance Companies to be match their life insurance policy lists with the state death index database on a regular basis. This will help to substantially reduce the chances of life insurance policies not being paid when someone passes away.
- (1888PressRelease) October 20, 2012 - Local Governments are taking note of the millions and millions of dollars that remain unclaimed from life insurance policies because, life insurance companies are unaware when a policy holder has passed away. States are now passing new legislation, that requires life insurances companies to check State databases of recent deaths against their policy holders. This will ensure, that the beneficiaries of the policy will receive the benefits that the holder of the life insurance policy intended them to have and will help put millions of unclaimed money back into the pockets of the rightful owners of these funds.
This new Act started when the Department of Financial Services began an investigation into how life insurance companies handled policy holder's deaths. The investigation helped over 32,000 consumers receive more than $262 million in unclaimed death benefits. In New York alone, over $95 million in unclaimed money was handed back to over 7,000 residents.
"People sacrifice to buy life insurance to help their loved ones after their death, so it's reasonable to make sure their families actually receive the benefits when they are eligible. Our investigation clearly proved that life insurers should be checking the list of recent deaths as a standard practice to find out when benefits may be due," Governor Cuomo said.
At a minimum Insures must now:
1. Cross check their policies at least every three months with recent deaths.
2. When a policy is sold, request more detailed beneficiary information.
3. Search for multiple policies on the same person in the files of all insurers owned by a holding company.
4. Cross-check policies with consumer requests received through the State's new Lost Policy Finder at www.NYPolicyFinder.com.
The primary focus of these new rules for life insurance companies is to make sure, that unclaimed benefits go to the beneficiaries.
Life Insurance companies must also hand over unclaimed policies to the State, the same way that ordinary business must hand over unclaimed property, that remain unpaid for a legally determined period of time. In the case of life insurance, the usual period is 3 years. In addition, the new regulation for life insurers now requires them to submit every year to the Office of the State Comptroller the number of policies for which a death occurred but for which the insurers were unable to find the
beneficiary.
"The new legislation by New York, is great news for consumers who may not know if they are a beneficiary to a life insurance policy, since they will now be notified sooner that they have an unclaimed benefit. Let's hope other states follow suit", says Edward Palonek, founder of Foundmoney.com, a company that provides information to Americans on where they may find lost or forgotten money and other assets.
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