Weeks after Florida Governor Rick Scott signed into law a provision requiring life insurance companies to do more to find beneficiaries, a report from the California Controller’s Office has found that thousands of state residents are owed money.
The report suggests that some Californians are owed $307 million in life insurance benefits because they did not know they were beneficiaries, and insurance companies made no effort to notify them.
In some cases, beneficiaries are owed more than $100,000 – the trust of Huan Lin in Los Angeles County is owed $583,000 and 50 others are owed $150,000 or more.
And, according to a San Francisco Chronicle report, the insurance companies have waited so long to find beneficiaries that many have died. The money is now owed to unnamed heirs.
California Insurance Commissioner Dave Johnson called on companies to pay the full value of old policies to beneficiaries for accounts going back to 1995. They are also required under the law to pay beneficiaries 3% compounded interest on the value of the accounts.
“That’s real money for people from their husband, wife, father or mother who bought a policy and paid for it,” Jones told the Chronicle. “Those beneficiaries have a right to that money, regardless of whether it’s $25. And we will do everything to make sure they get it.”
The insurance industry, through the American Council of Life Insurers, said benefits only go unclaimed in a small percentage of cases and that “life insurers want everyone to receive the benefits to which they are entitled rather than paying unpaid benefits to state governments.”
ACLI President Dirk Kempthorne added that the majority of companies go well beyond what current laws require to see if a policyholder has died and whether benefits are owed.
In the wake of this discovery, some consumers are calling on regulators to follow Florida’s lead with a law that would require companies to retroactively look at policies to see if there is money owed to beneficiaries.
“These companies are not regulated the way they should be,” Susan Phelan, a beneficiary of a Prudential Insurance policy recently made public, told reporters. “It results in them coming up with policies 200 pages long that hide things that hurt people later. It allows [companies] to add these loopholes that benefit them.”
