Beginning in 2018, insurance companies must become more diligent in notifying beneficiaries of life insurance policies
The law began with an audit by Illinois State Treasurer Michael Frerichs.
“We did audits of about 20 different life insurance companies and discovered over half a billion dollars in unpaid benefits… over a 5 year period. That’s 550-million dollars,” he said.
Life insurance agencies will be required to look back at their electronic records, dating back to the year 2000, to be certain beneficiaries are receiving payments.
They must also utilize the Death Master File, an electronic database created by the Social Security Administration, every six months to initiate payments to beneficiaries.
“This will apply to all life insurance companies selling policies in the state of Illinois and we think we might discover hundreds of millions of dollars more,” Frerichs added.
Frerichs says this shouldn’t be a difficult change.
“If insurance companies follow the law, your average listener won’t have to do anything. If they are the beneficiary of a life insurance policy, the insurance company should reach out to them to let them know.”