STATE OF CONNECTICUT
153 Market Street
Hartford, CT 06103
Insurance Department Launches Inquiry
Into Practices of Death Benefit Payments
State Insurance Commissioner Thomas B. Leonardi announced today that he has launched a formal inquiry into the business practices of life insurance companies regarding timely payments of death benefits to beneficiaries and the protocol used to locate those beneficiaries.
The Commissioner expressed great concern that some insurers may not make reasonable efforts to locate life insurance beneficiaries once a policyholder has died or fail to confirm that a policyholder has died, allowing the policy cash reserves to pay the premium until it lapses.
The Commissioner said some companies may use U.S. Social Security Administration’s Death Master File to stop annuity payments once a policyholder dies, but fail to use the same database to check dormant life insurance policies to determine if the policyholder has died. The Department’s inquiry will address insurers’ use of and records relating to that Social Security database.
“It is a double standard that we will not tolerate. Connecticut insurers are put on notice that the Department fully expects them to make every effort to locate all beneficiaries – especially in this age of rapid communication and countless databases. If, after good faith efforts, they cannot locate them, then they must comply with state laws regarding unclaimed property.”
In Connecticut, any accrued funds from policies are declared unclaimed property after three years and are overseen by the State Treasurer’s Office.
“Policyholders kept up their end of the bargain by making their premium payments and trusted their insurer to make good on its promise to pay the beneficiaries. The money belongs to the beneficiary – not the company,” Commissioner Leonardi said.