Palonek Reminds Family Members To Keep Life Insurance Policy Information Up To Date In Order Being Cancelled Or Not Paid Out
Life Insurance Companies are being made accountable in ensure that every effort is being made to locate the beneficiaries to life insurance policies, says founder of foundmoney.com, Edward Palonek.
- (1888PressRelease) February 14, 2012 - For many years now, Insurance Companies have been receiving hidden benefits in the form of interest from money left in unclaimed life insurances policies that are not being paid out. According to Edward Palonek, founder of foundmoney.com, this happens when Insurance companies can not locate the beneficiaries to the policy or when family members of the deceased person fail to inform the Life Insurance company of the death of the policy holder.
Cash strapped State governments are now making Insurance companies be more diligent in locating the owners of the policies and to also properly account for these unclaimed insurance benefits.
There have been two recent high profile Investigations launched against two Insurance companies that have resulted in huge gains for policy holders and beneficiaries.
The States of Florida and California have recently reached settlement agreements with two large Insurance companies, Prudential.Insurance Company of America and its affiliates and John Hancock Life Insurance Company, a unit of Manulife Financial Corp, after the Florida Office of Insurance Regulation (Office) along with the Department of Financial Services (DFS) and the Office of the Attorney General (AG) launched their investigations into these Insurance companies practices of failing to report unclaimed insurance money.
Mr. Chiang, California's State Controller, even accused John Hancock Insurance of a a long standing practice of avoiding paying death benefits by paying themselves premiums from the accrued cash value of a policy, that became inactive upon the death of the policy holder. The policy cash reserves eventually get depleted after an number of years and the Insurance Company then cancel the policy for none payment. This results in a huge windfall for the Insurance company, they received premiums all those years, but then do not payout the unclaimed insurance money that was owing to the beneficiaries.
Such practices have finally resulted in Insurance Companies getting into trouble with the States for failing to report and hand over unclaimed Insurance premiums. Prudential has agreed to pay $17 million in unclaimed Property Settlement, while John Hancock Life Insurance agreed to pay $9.5 Million in unclaimed insurance benefits owed to Floridians.
According to Jeff Atwar, Florida Chief Financial Officer, both settlements stem from the insurance industry's longstanding practice of using the U.S. Social Security Administration's Death Master File to discontinue recipients' annuity payments but not using the same file to determine that death benefits are owed after the deaths of insured individuals.
As part of the agreement, Prudential agreed to:
•Overhaul its computer system and revise its business practices to better utilize the Death Master File to identify life insurance beneficiaries.
•Pay a national $17 million settlement payment.
•Return monies promptly to beneficiaries when located through revised search efforts.
•If a beneficiary cannot be identified, the amount due will be reported to the Unclaimed Property Bureau of the Florida DFS or the appropriate state unclaimed property office in accordance with state laws.
•Provide quarterly reports for the next three years to the Office, DFS and the AG with updates on information specific to Prudential's implementation of the agreement.
The lead investigatory states were California, Florida, Illinois, Pennsylvania, New Hampshire, New Jersey, and North Dakota, and these states have all signed the agreement. For the agreement to become effective, a total of at least 20 states need to sign. All states have until March 31, 2012 to sign the agreement to become eligible to receive the distribution of the settlement payment.
Insurance Commissioner Kevin McCarty says that "Based on hearings conducted in May 2011, we know that the failure to search for beneficiaries even though the company has access to death information is a pervasive industry practice. The Office will move vigorously to ensure that other companies also revise their business practices to ensure beneficiaries are given all the life insurance proceeds to which they are entitled."
Attorney General Pam Bondi with the Florida Office of the Attorney General went on to say that "Life insurance companies should devote the resources necessary to find beneficiaries and make payments in a timely manner, and this settlement is one more advance in changing industry practices to protect rightful beneficiaries."
"The settlements are great news for people that are entitled to these unclaimed insurance policies, who did not even know they hand insurance money owing to them. It is always sad when a loved one passes away, but for many, this new foundmoney can be a way to start over again and realize their dreams". says Edward Palonek