US Life Insurers finally do the right thing on unclaimed death benefits

Re: Insurers have been found to be collecting premiums till the accounts are depleted...even though they should or 'did' know that the policy owner was deceased..They have reached a $267M in settlements 

It’s been going on around the US for a year or so…Individual States, squeezing Insurers to come ‘clean’ on death benefits that have remained unpaid instead of going to rightful beneficiaries. Nearly $267M in unpaid death benefits have already been recovered in the State of California alone.

In the US they take unclaimed property/funds very seriously. In the US it’s serious because unclaimed property has been an important part of consumer protection legislation more/less the1940’s. Not so in Canada.

In the US, each state requires ‘holders’ to forward unpaid or unclaimed amounts to them and each State proactively looks for the owners. In the meantime, each State uses the cash, but for the most part there is no deadline for the asset to be claimed.

In the case of life insurance it might be difficult to determine when a death benefit is unclaimed-without knowing if the owner of the policy is actually deceased. The problem is solved by using the ‘death file’ which each insurer runs against their policies to determine the ones where the owner has died. The problem is that in some instances, the insurers, were able to use the ‘death file’ to stop paying annuities but not to stop collecting premiums on policies or to seek the beneficiary out in order to payout the death benefit. 

In California, almost a dozen insurers continued to deduct premiums against policies until all the cash benefit was depleted and then they closed down the account without notifying anyone. Of course, the onus is on the beneficiary to file a claim; but in these cases, there is no disputing the fact that the insurers knew the owner was deceased and in most cases, it was a matter of the beneficiary not knowing that there was a policy.

The state controller, John Chiang said, “it's ethically and morally wrong for an insurer to sit back and do nothing after finding out that a policyholder has passed away….

They should do what they promise," If you're going to spend billions of dollars advertising that you'll be there when people need them, then you should do it. You should do the right thing."

Sheila Bridgeforth, a company spokeswoman, declined to comment but said Prudential believes that "there is nothing more important than honoring our obligations to our policyholders."   Which is apparently the reason they settled up for $47M last year with the State of California which has resulted in beneficiaries like the one noted in the article, receiving death benefits years after they should have. Her Mother died in 1995 and her father passed away in 1999. In 2013, she received $11,000 from their policies. 

Read the full article here from the David Lazarus of the LA Times Dated June 18 2013

LA Times-Life Insurers finally do the right thing on unclaimed death benefits

Before you go…Mr. Carney:

(An open letter to Mark Carney)

There’s been a fair bit of ongoing analysis and controversy surrounding the remarks you made some months ago about Corporate Canada sitting on huge piles of “dead money” on their balance sheets that could be better utilized to feed the economy or failing that; returned to investors.

Stop sitting on your cash piles, Carney tells Corporate Canada

Financial Post Aug 22 2012

Free up 'dead money' Carney exhorts Corporate Canada

The Globe and Mail Aug 22, 2012

Canada's corporate 'dead money' grows as consumers fall deeper in debt

Toronto Star Sept 17 2012

Dead Money

Canadian Business Feb 12, 2013

Ottawa's 'dead money'

Ottawa Business Journal Dec 3 2012

Carney urges firms to spend cash or return to shareholders

CBC News August 23 2012

Estimates vary but it seems that the total balance of ‘dead money’ has increased as much as 40% since 2009; and may total as much as $526 Billion… and that has you concerned. 

That is indeed a lot of cash.  No question there.

But, as you head out on your new adventure and leave the Bank of Canada,  I think it’s only fair to point out that corporations are not alone in holding onto ‘dead money’ that could be better utilized to grow the economy.

I am a bit embarrassed to point out that our own highly respected Bank of Canada which you have so masterfully governed for the past 5 years, is itself currently sitting on $500Million in unclaimed funds which I think we could agree may also be described as “dead money” and money that could be much better utilized to feed the economy….if not the actual owners.  That might be possible, if only the Bank of Canada took a more proactive approach to finding those owners.

Indeed, the rise in the balance of unclaimed funds in the Bank of Canada certainly appears to rival the rise in ‘dead money’ in Corporations with an increase of 55% over the past 5 years (!) That’s an extraordinary increase on an extraordinary balance of ‘dead money’ given that the this balance of $500M only includes amounts turned over by federally (not provincially) regulated banks, and only after 10 years of inactivity and only where those accounts are held in Canadian dollars (no foreign $ amounts). 

Alas, despite this extraordinary increase on an extraordinary balance on a population of only some 34M Canadians, very little awareness and very little effort seems to be being made in trying to locate owners. Granted, the Bank of Canada does update this balance once a year and provides an online database for unclaimed funds; whereas, the same treatment is not afforded to the balance of Unclaimed/Matured Canada Savings Bonds which are also piling up at the BoC. 

It is not a published number but I understand the value of Unclaimed/Matured Canada Savings Bonds totaled $259M as of this past April which I believe would make that an increase of $147M or 231% or over the past 5 years. 

Extraordinary and Sad at the same time.

So, using the same argument you have made for ‘dead money’ in Corporate Canada…for the sake of the economy AND in this case, for the sake of Canadians generally, don’t you think we could put a little more effort into reuniting this money with owners?  

This is after all, the age of technology so one would think we could apply a little technology to finding owners and making things right. But as well,  if some inspiration is needed into this challenge, we can also look south for some good ideas given that the US has had consistent & comprehensive unclaimed property legislation in place for 50+ years. In the US, unlike the situation in Canada, unclaimed property legislation is an  important part of consumer protection legislation. Sadly, that's not the case in Canada; but it should be. Each state in the US has enacted unclaimed property legislation requiring the transfer of all unclaimed property to  that State who then takes a very proactive role in helping to return assets to owners. 

So before you go...perhaps you and Mr. Poloz could give the 'dead money' in the Bank of Canada some thought. 

Brenda Potter Phelan 

Legacy Tracker Inc.

Oakville and Cambridge ON

Another explanation about unclaimed safety deposit boxes (American Style)

What happens to safety deposit boxes in the US after 10 or so years?

the site www.punny.org sees explains it this way:

The fate of abandoned safety deposit boxes according to Punny Money

The secrets behind unclaimed safety deposit boxes

 

From a story by the New England Cable News
Post-Crescent Madison, Wis (AP)
Feb 16 2013

Unclaimed property, untold stories in safety boxes

I am sure any day now someone will realize that they could make the story of unclaimed safety deposit boxes a reality TV show but until they do so, I pass along this story by  New England Cable News which shines some light on how the US handles unclaimed safety deposit boxes (for obvious reasons, it fails to shine any light on what happens here in Canada but we will keep trying)

NECN - Unclaimed property, untold stories in safety boxes&

In the US, each State takes responsibility for the boxes after 5 years of no activity (most importantly, missed payments) because safety deposit boxes are considered unclaimed property and well, the US has had unclaimed property legislation for about 40+ years.

After reading the story of a typical day of opening abandoned safety deposit boxes in in a typical state like Wisconsin I have a new appreciation of why they REALLY try to return the boxes to the rightful owners.

Hundreds of boxes arrive at this particular office in Wisconsin but each State may vary in the additional amount of time they will hold abandoned items after receiving the boxes from the banks who have already held them for 5 years.. Wisconsin holds boxes for 2 years while Iowa will hold boxes for 10 more years.

"We've really tried to push our outreach efforts to let people know about unclaimed funds and getting money back to people," said Scott Feldt, the deputy state treasurer. "That's our major effort, that's why we are here."

They do so at by way of public events, radio, TV and newspaper interviews. They also publish lists of people owed unclaimed property in various newspapers and in their searchable online database.

More commonly, they hold coins and jewelry, old stamps and personal documents, like wills and marriage certificates. But often times unusual items of no monetary value re found in the boxes and they have no choice but to destroy. This story details some of those finds:

·        One box contained a Band-Aid box and two toenails, wrapped in tissue.

·        One box contained an empty envelope.(only)

·        One box contained nothing but spoons.

·        One box contained a Rolex box, but alas, no Rolex.

·        One box contained dental gold, teeth still attached

Some of the items are sold in monthly eBay auctions. The office holds the proceeds for the owner in the event someone later claims them.

Perhaps not these particular items but some items that are found to have value are sold in monthly eBay auctions and then the proceeds are held for the owner in the event someone later claims them.

And while it may depend on the State most will hold onto certain special items ‘in perpetuity’ like photographs and war medals which they know would mean the most…if they eventually find the rightful owners.

All in all, it seems like a fairly civilized and respectful process and transparent!

I look forward to unravelling the story of unclaimed Canadian Safety deposit boxes.

 

Are Canadians really wasting $1B a year in unused Gift Cards?

 

 

I think I have written about my aversion to Gift Cards before. Yes I have several on hand myself and I have certainly given out my share but that doesn’t mean they don’t make me nervous. They make me actually jittery. What if the Company is no longer around when I get around to using a Gift Card I have? What if I lose a gift card? Right now my husband is searching for a $50 Keg Card and I can’t get it off of my mind. 

An edition of Daily Finance this week provides a nice list of alternatives if you can't get around to using your gift card or it's just not a card you have much interest in

 Daily Finance Article::5 ways to Cash in Unwanted Gift Cards

This article to seems to suggest that 56% of cards don’t get used. Consumer Reports magazine had last estimated that 25% of cards remain unused more than a year after received , CardSwap which is a Canadian site for buying, selling or donating gift cards estimates that Canadians waste up to $1 Billion a year by not cashing in gift cards.

No matter the actual total-it's  a lot of money. The most popular reason for not using a gift card is reported as  "not having enough time to shop "(59%). I am definitely included in that group. The second most popular reason given by consumers for a gift card not being used is not finding an item that they want to buy at that particular retailer (35%).  So, that sort of defeats the entire reason that the person gave the gift card in the first place. Lost cards are somewhere in the neighbourhood of 10% and some estimates of cards issued in a year are as high as $90 Billion.. I prefer not to do the math on this.  

In some US States retailers are now required to register the cards in a name because gift cards will now be covered by “unclaimed property”  legislation (which I have definitely mentioned on this blog before)  Oh America you are beautiful sometimes.

In any case, the article lists the following sites with some pros and cons of each. As an added bonus, most of these sites are also able to check your card balances as well (a much more efficient way to find the balance instead of searching through each retailers

Gift Card Granny-Canadian Site 

Plastic Jungle Site

Raise Marketplace-Where you set the price

Card Cash Site

Card Giver for Donations-100% are distributed to Organizations and People in need

Card Giver is such a great site-they get an amazing amount of cards that have even less than $1 which they are grateful to receive because they all add up. I am waiting to hear back if Canadian cards can be donated here.

Canada’s biggest site right now for Buying, Selling or Donating gift cards although donations seem to be restricted at this point to specified gift card drives

CardSwap

Many Canadian charities now gladly accept gift cards and the information for doing that is on their website

The rules about gift cards related to expiries, fees, terms or conditions vary by Province. The Retail Council of Canada has a summary of Gift Card legislation on their site
Retail Council of Canda-Gift Card Legislation by Province
 

Perhaps this long weekend might be a good time to clean up and out our wallets if you have too many old gift cards lying around

 

 

 

 

 

USA Unclaimed Property Balance hits $58 Billion yes $ 58 Billion

 

It looks like the unclaimed fund balances have recently  been updated by each State, federal and other organization as required in the United States as a new figure is being quoted for the total held. Ready....?

The new estimated value for unclaimed property is now ...$58 Billion.

Again, sad but true. That's a lot of money as it works out to approximately $186 per resident of the US. Imagine if that money was all put to use in the economy.

The list of assets included in what the US defines as unclaimed (or abandoned) property (or sometimes referred to as unclaimed assets or unclaimed funds) is quite wide ranging in the US and actually getting wider.

Common forms of unclaimed property in the US includes savings or chequing accounts, stocks, uncashed dividends or payroll checks, refunds, traveler's checks, trust distributions, unredeemed money orders or gift certificate/cards (in some states), insurance payments or refunds and life insurance policies, annuities, certificates of deposit, customer overpayments, utility security deposits, mineral royalty payments, and contents of safety deposit boxes.

Here's some further detail on this $58 Billion estimate:

·        $300 Million in pension benefits from employment owed to 38,000 individuals

·        $16 Billion worth of matured US savings bonds (more than 45 million bonds)

·        $153.3 Million in tax refunds that were not deliverable by the IRS

·        $1 Billion in unclaimed insurance policy proceeds

·        $41.7 Billion in unclaimed funds held by individual states.

This last figure of $41.7 Billion is worthy of some further explanation. .

While rules vary slightly between each state, specific types of property are considered as being ‘abandoned’ or unclaimed when there has been no activity for 1-5 years. At that point, all financial organizations or any organization holding such property or funds are required to turn them over to the State Treasury.

Each state then takes over the search for owners through websites, newspaper ads, and booths at Malls and events like State fairs and Exhibitions. While searching for the owners, the State can use those assets to fund government operations but the owner’s claim to the property remains intact. Of the $58 Billion in unclaimed funds that has been reported, $41.7 Billion is being held by individual States. .

"The money belongs to the owner in perpetuity. Even if the owner dies, then their heirs could come back and claim it," said Carolyn Atkinson, West Virginia's deputy treasurer for unclaimed property and a past president of National Association of Unclaimed Property Administrators.

More on this story:

WPTV news story on unclaimed funds

To learn more about the National Association of Unclaimed Property Administrators and for a link to all State databases : NAUPA Website