What happens when life insurance companies have to find beneficiaries rather than wait for beneficiaries to file claims?

In the case of the US, it means that more than 89,000 people across the country are receiving a share of $665 million or more in life insurance benefits that many didn't know they were entitled to receive.

New York Gov. Andrew Cuomo attributes the payouts as being the result of a measure signed into law last year which requires insurance companies to try to find beneficiaries rather than wait for recipients to file claims. That makes some sense since many recipients were named by relatives or friends and did not know that they were named beneficiaries under life policies.

"It is only fair for families and individuals who lost loved ones to receive the life insurance benefits to which they are entitled," Cuomo said. "Life insurers are now responsible for proactively identifying policyholder deaths and are making good faith efforts to find people so hundreds of millions of dollars in unclaimed benefits can be paid."

A probe involving New York-based companies turned up more than 18,000 New Yorkers who will now get $206 million in life insurance payouts.

State Financial Services Superintendent Benjamin Lawsky said most of the beneficiaries of these "lost policies" were from middle class, working families. No state-by-state breakdown of recipients was available.

In the case of New York, both the state and insurance companies have developed a "lost policy finder" system on the state Financial Services Department website at www.dfs.ny.gov

Consumers can apply for a search for lost or misplaced life insurance policies and annuity contracts on the deceased. Companies would then begin paying benefits that are due.

These payouts will go directly to beneficiaries as opposed to going to state government offices which would then look for the beneficiaries, years down the road.  That’s more good news…for beneficiaries in the US. Not Canada.

Go to the original WSJ article online