What if your life insurance company looked to find ways to discontinue payments, but not to locate beneficiaries who were missing payments owed to them?
Well it happened and one major life insurance company has recently settled a law suit where they must pay nearly $500 million to people across the United States who were not receiving payments owed to them. This is the third insurance company who has been forced into a similar settlement.
How did this happen?
Insurance companies use the “Social Security Death Master File” to determine who is dead or alive, but in this circumstance if an individual had died, they were not proactively sending the beneficiaries’ their money. You as a recipient of said money would have to know you were a beneficiary, know the company it was held by, and actively pursue it. I believe it is a fair statement to say that not all of us know if we are listed as a beneficiary on a policy and moreover where to submit the claim.
As part of a multistate settlement, these insurance companies must figure out a way to monitor and maintain contact with their insurance holders.
As a best practice these companies need to find customers they have lost contact with over the years. Using technologies that integrate the best public and proprietary record databases, they could see if their customer is dead or alive. In addition through these services they could match that individual to the last known address. Finally if the customer happened to be deceased, they could reach out to the relatives of the beneficiary. All of this is easily accomplished with the databases which have the most up to date addresses and comprehensive information on individuals who may have insurance.
Obviously in this instance a few insurance companies were at fault for a lack of due diligence on their part. Nonetheless some responsibility rests with the insurance holder who must advise family and friends who are designated as their beneficiary’s. Then those people need to actively follow up once that time arrives.
Can you conceptualize ways in which we could determine if we are a beneficiary? How about a centralized website where a user entered their social security number, and then they would know who has them listed as a beneficiary and the name of the insurance company… just a thought.