Imagine a policyholder dies and no one makes any claims, who gets to keep the money. That’s right, the insurance provider has pure profit, since they can hold on to these funds for sometime before turning it over to the state as unclaimed property and during this period they can invest the funds for profit. Well a new law passed in Montana requires that life insurance companies search for beneficiaries rather than wait for claims. This law is in reaction to national settlement agreements where life insurance providers accused of not searching for beneficiaries when a policy holder dies. This law sponsored by Senator Mary Caferro asks life insurance companies to check social security databases for death of any policyholders. This check needs to be done at least twice each year.
Policy holders buy and pay for life insurance so their families have a cushion when something happens and it is simply not right for life insurance companies not to make an effort to pay eligible beneficiaries. This is right step forward for legislation to protect the consumer, however it is best practice for consumers to let close relatives know about any policies or to leave certain documentation in case the unfortunate happens. Montana has definitely made the right move in passing this law and let’s hope other states will follow in Montana’s footsteps.
