Life insurance companies that don’t pay death benefits?
I didn’t believe it, either.
Life insurance companies choosing to not pay death benefits even when they know, or should have known, their customer passed away.
The Illinois State Treasurer’s Office uncovered this issue because there are life insurance policies – here and in every other state – that go unpaid and become unclaimed property. An example is when a church-going person passes away, names the congregation as a beneficiary, but does not tell the pastor or church leaders. The church never claimed the benefits because they did not know they were a beneficiary. Eventually, those benefits should be remitted to the treasurer’s office as unclaimed property.
But, we heard too many examples like the woman who adopted her friend’s severely learning disabled teenage boys after a tragic car accident or children of veterans and coal miners where the insurance company never contacted the beneficiaries.
Not paying death benefits is fundamentally unfair. It literally keeps money from widows and orphans. Who purchases a life insurance policy with the intention the money will stay with the company rather than the family?
That is why we fought to change the law. The opposition was fierce, especially from big life insurance corporations. They hired expensive lobbyists to try to stop us. One even sued us to stop the Treasurer’s Office from examining their records. They flatly stated that they had “no affirmative obligation” to find and pay beneficiaries.
Eventually, with the help of great partners such as the VFW, the Catholic Conference of Illinois, Citizen Action Illinois, AARP, and the NAACP, we prevailed. It took two years, two different public acts, a legal settlement, and even an override of a Governor’s veto. But we overcame the special interests and their lobbyists.
Now, under Illinois law, life insurance companies are required to see if their customers have passed away. If a customer has passed away, and their beneficiaries have not claimed the benefits they are owed, the insurer has to notify the beneficiaries. If they cannot find the beneficiaries, those benefits have to be turned over to the state treasurer as unclaimed property.
At the time we changed the law, auditors working for the State Treasurer’s Office already found more than $550 million in death benefits that were not paid to grieving families in Illinois. The Wall Street Journal reported that, nationally, the figure was more than $7.4 billion. Now in 2022, we have found more than $800 million for families in Illinois.
We also included a key provision in our legislative efforts: The audits that initially identified the issue must continue. Yes, the insurance companies said they would follow the enhanced rules. But, as a President, and son of Illinois, once said: Trust, but verify.
Because of these audits, and the hard-won changes in Illinois law, we are connecting people with millions of dollars they are owed every year. In the coming weeks, we hope to pay one man nearly $90,000 from two unpaid life insurance policies. Each was found through an audit. The insured passed away 20 years ago in 2002; the beneficiary has lived in the same house even longer.
Every time we pay a life insurance benefit – especially one found in an audit – I am remined that the late night battles are worthwhile.
I’m also reminded that the people of Illinois deserve no less.
Do we have your money? You can search here.
via Illinois Business Journal
May 9, 2022 at 07:10AM