Vermont has joined some of the other states who recently passed laws to protect consumers in regards to unclaimed life insurance proceeds. Other states who have recently passed laws are Alabama, Maryland, New Mexico, North Dakota, New York, Kentucky and Montana. The new laws are passing requirement for insurance companies to search and find people they owe money to. In another word when a policyholder passes they will be required to go through steps to find people the proceeds should go to rather wait to see if any claims are mad. In general recent audit results were showing that insurance providers were not aggressive enough to find beneficiaries when a policyholder passes away. Many major life insurance providers have had to settle and enter into agreements with the states in order to improve their practices around tracking down beneficiaries of policies.
In particular Vermont law requires insurance providers to regularly check databases of their policyholders against the Social Security master database where deaths are recorded in order to identify policyholders who have passed away.
Auditors found that many life insurance companies were not being aggressive enough about tracking down beneficiaries when people with life insurance died. Several large companies, including Prudential, AIG, Lincoln Financial and others, have entered settlements with states to improve their practices.
Now legislatures are joining in, with Vermont and several other states passing laws spelling out the steps companies must take to find the people owed money when one of their policyholders dies, therefore triggering a benefit payout procedure. Then they need to make an effort to find the policyholders with a 90-day period. If they are not successful in locating beneficiaries of the unclaimed insurance policy proceeds then they will need to send the policy benefits to the state and inform the state so they may continue the search in locating the living beneficiaries of the proceeds. This law will hopefully help those living in Vermont to receive benefits in a timely manner and definitely before the funds are turned over to the state and to avoid either the insurance company or the state holding on to these funds for long periods of time. According to state treasurer the insurance companies already check the database to determine if annuity payments need to be done, so additional check should not incur any issues and therefore needs to be implemented.
Many people will benefit if insurers properly and on regular basis investigate and life insurance payouts due to the public. There are many people who receive surprise payments in many cases used to help with costs or emergency situation or sometime helping with a special treat such as Mr. Bussard who received over $5000 of proceeds from his mother’s life insurance policy which will help him make a trip to see his daughter across country after 18 years. According to reports there were 2500 policies totaling in $2.5 million dollars turned in to the state last year. Whereas insurance providers claim they paid over $200 million dollars in life insurance proceeds last year.