Major life insurance companies allegedly failed to pay death benefits to beneficiaries. Recent investigations led to 25 major companies agreeing to pay over $7.5 billion.
A recent segment on 60 Minutes revealed that many insurance companies failed to pay beneficiaries the life insurance they were owed. According to reports, the insurers allegedly knew of their policyholder’s death, but failed to pay their spouses or children the money allotted to them.
Kevin McCarty, insurance commissioner of Florida, led a national task force to investigate life insurance companies. He found many instances where the insurers failed to respond to beneficiaries after their loved ones died. Rather, if the deceased’s spouse or children did not file a claim, the companies allegedly kept the money in their investment accounts rather than pay the families. McCarty discovered back death benefits ranged from individuals being owed over $1 million, while others should have received $10,000 or less. Regardless of the amount, loved ones deserved this money.
The Chief Financial Officer of Florida, Jeff Atwater, does not see how this could not be intentional. He found that many of the major life insurance companies, such as MetLife, Prudential, and John Hancock, allegedly failed to pay the appropriate death benefits. He did say that many insurers tried to right their wrongs.
State regulators first learned of the unpaid benefits in 2006. Jim Hartley and Jeff Drubner, owners of a technology and auditing service called “Verus Financial,” found that many insurance companies used the Social Security Death Master File, a database that lists the names of the deceased in the United States. Drubner asserted that with this knowledge, the insurers knew about who had died, thus knowingly did not pay the beneficiary their benefits. Rather, the two men found that many insurance companies used the list to promote their own agendas. For example, some insurance companies would allegedly stop retirement and annuity after learning their policyholder passed away.
In addition to unpaid death benefits, investigators found that some insurance companies allegedly siphoned policyholder’s retirement plans and nest eggs after they had died. After the individual passed away, these companies would supposedly continue to pay themselves the premiums out of other means of finances.
During the investigation, 25 leading insurance companies agreed to pay beneficiaries or the state over $7.5 billion without admitting to any wrongdoing. Another 35 insurance companies are still under investigation.
At Levinson Axelrod, we believe insurance companies have a duty to offer honest, comprehensive services. If they fail to follow appropriate policy, they cheat the policyholder. If your insurers failed to pay the benefits you were owed, contact our New Jersey insurance bad faith attorneys today.
To watch the segment, here is the video.