April 30, 2012
Insurance Companies Agree to Pay Death Benefits Despite Clear Contractual Obligations
Friend of the blog Alan White, whose whereabouts are currently unknown but who was recently seen in New Orleans and who, according to a Google search, is currently an adjunct professor at the CUNY law school, sent us this news item from the New York Times last week. According to the Times, MetLife is now the third major life insurance company to settle with regulators from numerous states. The basic issue is that policy holders die and the insurance companies do not pay out their claims. The way the policies are written, a survivor or representative must contact the insurer to colelct on the claim, but often the survivors either do not know of the policy or cannot find any information relating to it. The states say that it is no great burden for the insurers to run their list of policy holders against the Social Security Administration's master death index. They do so regularly in the case of customers who purchase annuities, and they halt payments upon learning of the eath of an annuity holder.
The states expect to collect over $1 billion from the three major insurers over a number of years. New York state has been separately pursuing unpaid death benefits and has recovered $262 million from the insurers.
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