The state of Florida has put the squeeze on some of the nation’s biggest life insurance companies to hand over benefits from almost 96,000 unclaimed policies worth more than $75 million — money that might be yours.
But be warned: The vast majority of those unclaimed death benefits are worth less than $1,000 each, according to a state Department of Financial Services database. That’s because most were sold as low-value industrial policies decades ago.
Five major insurers — John Hancock, MetLife, Prudential, AIG and Nationwide — reached settlement agreements with Florida and other states in 2011-12, after regulators accused them of failing to check the names of deceased policyholders against a Social Security death file in order to find and pay surviving beneficiaries.
“This is not over, not by a long shot,” Insurance Commissioner Kevin McCarty told the Miami Herald in a recent interview, pointing out that Florida and other states are pursuing a potential bonanza of $3 billion in total unclaimed life insurance policies held by some 40 U.S. insurers nationwide.
Now, the insurance companies must regularly check the Social Security Death Master File to confirm policyholders’ deaths and find their beneficiaries under the settlement agreements. If they cannot locate them, the insurers must turn over the unclaimed policies and proceeds to the state. So far, the value of each policy turned over to the state has averaged about $785.
The state then hunts down potential beneficiaries by listing deceased policyholders on a government Web page and by media advertising and sending out notices. The state has processed more than 10,000 unclaimed polices over the past three years, with payouts averaging about $1,450.
A spokesman for Newark, N.J.-based Prudential said a couple of factors have influenced the spike in unclaimed policies turned over to the state. Modern software technology has allowed insurers to identify more deceased policyholders on Social Security’s death list, by focusing on transposed letters and numbers.
Also, the companies have waived their practice of requiring death certificates for unclaimed policies, including the industrial contracts sold door-to-door as far ago as the Great Depression.
“We were not holding [the benefits] illegally,” said Prudential’s chief communications officer, Bob DeFillippo.
DeFillippo said that Prudential, which has handed over about 9,000 unclaimed death benefits to Florida with values totaling about $17 million, tracks down the vast majority of its deceased policyholders and beneficiaries. He said the unclaimed policies turned over to the state represent a “fraction” of Prudential’s annual life insurance payouts.
“We don’t get to keep any of the money,” he said. “It’s either paid to the beneficiaries or it’s turned over the state.”
AIG turned over about 71,500 unclaimed life insurance policies in 2011-12 valued at $31 million, with an average benefit of $435. Asked about the company’s high number of unclaimed policies and low values, AIG issued a statement, saying: “AIG is among the industry leaders in ensuring that beneficiaries will receive insurance proceeds.”
“In 2011, prior to receiving any regulatory inquiries, AIG began a diligent review of policyholder records, including matching records against the Social Security Death Master File to identify policies where the insured may be deceased but no claim had been submitted to the company,” said AIG spokeswoman Linda Malamut. “As a result of this effort, AIG has paid more than $100 million to more than 22,000 beneficiaries’’ nationwide.