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Subscribe to RSSAccording to a recent study in Consumer Reports, there's a one-in-600 chance that you're owed unclaimed life insurance money. NBC's John Yang reports.
By Jamie Novogrod, Producer, NBC Nightly News
NEW YORK -- Andy and Christina Fox, retirees living in Maryland, were shocked when they received a letter in late 2011 from a small life insurance company in the Midwest.
"To be honest with you, we thought it was a scam," Chris says. "It was five years after my father had passed. We had no knowledge of any insurance policies whatsoever."
It was no scam. It turned out that Chris's father -- an airplane mechanic and pilot -- had left thousands of dollars in a life insurance policy and never told his family.
"Final request," the letter announced. According to law, the money would soon be considered abandoned and turned over to state authorities.
How to find unclaimed life insurance benefits
Chris never knew the money existed because her mother had been named in the policy. But Chris's mother had since died, too, and Chris had sold her parents' Missouri home. Earlier notifications slipped through the cracks until the final request found its way to Maryland.
The letter set the Foxes off on a journey. To recover the policy, they hired a lawyer to create an estate for Chris's mother. They made countless phone calls. Scouring a Missouri unclaimed property database, Chris learned there was even more money out there. In sum, her father had taken out three life insurance policies, worth about $48,000 total.
"You had to look at the generation that he came out of. You're talking about the depression," Chris says. "People that didn't have any money at all didn't put it one particular place. They took small bits and put it in several different places."
The Foxes' experience isn't unique. According to a recent study in Consumer Reports, there's a one-in-600 chance that you're owed unclaimed life insurance money. Those are better odds than winning $100 on a Powerball ticket.
"The average benefit that's waiting to be collected is only about $2,000. But some of them are up to $300,000," says Jeff Blyskal, a senior editor at Consumer Reports and the author of the study. According to Consumer Reports, the total amount of unclaimed life insurance money nationwide is upwards of $1 billion.
The breadth of the problem has come to the attention of authorities, too.
Regulators set up a multi-state task-force in 2011, and last year major life insurance companies began paying millions of dollars in settlement fees and back benefits. The money, flowing into state unclaimed property offices across the country, comes after officials said that companies regularly delay finding beneficiaries of unclaimed money.
In January, New York Gov. Andrew Cuomo announced that more than $200 million had been collected for beneficiaries in his state. Florida, which led the multi-state investigation, has collected at least $51 million in back benefits -- and hundreds of millions of dollars more in fines. Other states that have collected money include California, Illinois, New Hampshire, and Pennsylvania.
"When Floridians put their family's needs in another's hands, they have a right to know their company will deliver on its promises and be transparent in its dealings," Florida's insurance commissioner, Kevin McCarty said in a statement.
Jeff Blyskal, Consumer Reports Senior Editor, on the life insurance money many American families don't know is waiting for them.Â
As a result of the settlements, companies have agreed to perform regular checks against the so-called Death Master File -- the electronic record the federal government uses to track Social Security recipients.
Among the companies that have reached settlements:
-- AIG reached an $11 million settlement with multiple states and has paid more than $100 million to beneficiaries who had not previously filed a claim;
-- Nationwide reached a $7.2 million settlement and has paid about $144 million to beneficiaries;
-- and MetLife paid $40 million in settlement money, and tells NBC News it is "on track with... remitting policy proceeds" to beneficiaries.
But critics say the life insurance industry should do even more.
"If the insurance company, or any company, wants to find you to collect a bill, for example, they have a pretty easy time doing it, through the credit bureaus and such," says Jeff Blyskal of Consumer Reports. "If they can find you to pay a bill, they can find you to pay you your life insurance benefit."
The American Council of Life Insurers, an industry group, says companies are adapting to shifts in technology, including the government's electronic records.
According to the group, there are 150 million life insurance policies in force across the country. Last year alone, the group says, the industry paid a total of $62 billion dollars in claims.
"While the amount of unclaimed life insurance benefits at issue represents a very small percentage of total claims paid, we know the percentages represent real people," the group said in a statement.
Read the full statement from the American Council of Life Insurers
Mary Jo Hudson, a spokeswoman for the group, added during an interview that it's not uncommon for months to pass before companies hear from beneficiaries. “Within a reasonable amount of time -- 18 months -- people would make a claim, so we would wait," Hudson said. "Often, people don't file a claim right after someone is deceased because of grieving issues."
Now, regulators are looking to draft model legislation that would require all life insurance companies to locate and pay beneficiaries faster.
Meanwhile, both critics and representatives of the life insurance industry agree that it's vital for policy holders to discuss their plans with family and loved ones.
"One of the problems with this whole issue is that it involves death, and people don't like to talk about death," Jeff Blyskal says. "But you really should. As you're getting older, if you have a life insurance policy, you should let your family know about what they're entitled to."
ACLI, the industry group, is offering a free website it hopes will makes such conversations easier, where users can put information in one place and share it with family and loved ones.
After the Foxes collected their money, they distributed it evenly among Chris's sisters. Chris and Andy Fox kept $16,000.
"I took my share, and hopefully invested it wisely," Chris says. "We'll use that to send my grandchildren to college."
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Insurance companies are quick to take your monies and find any way not to pay out any benefits...
Its your monies and insurance companies make a fortune on investments, interests and not paying out claims...
it's mine ... you eat pork & I get reimbursed
3 in 5 use cell phones while driving, Same sort of thing goes for DWI, drugs, etc. And they say we don't need more regulation. We need more jail sentences !
RAS, what's that got to do with the article?
In all cases, people are lazy or stupid, stupid.
If someone is looking for the details regarding the news cast, they aren't going to waste their time reading your propaganda
If an insurance company is holding anyone's money, they have an affirmative fiduciary obligation to find the owners. Sitting on it is not acceptable; neither is not investing in a failsafe vehicle. ©2013
Insurance polices get lost, and those who are due the benefit are usually not informed of the policies. Since the insurance companies aren't known about, they do not get a death notice. If there is no death notice, then they do not know to seek out those due the money and nothing says they have to.
BTW most insurance is a money loser. If it wasn't the insurance companies would not make a profit on it.
Don't get me wrong, as young people, you should buy life insurance, so your spouse and offspring aren't stuck with a mortgage they cannot pay for.
yes many of the policies are lost, BUT, all of these companies subscribe to the SSI death records and are they know when someone passes. What they are really doing is letting these policies continue to be paid on by deducting the monthly or yearly or whatever fees from the proceeds. In many cases, the policies "run out of money" before anyone gets paid. What the investigative companies are doing now is auditing these companies by going back into their records and cross referencing with when these people passed away to make sure that the funds are restored to the policies and then reported to the unclaimed property units where they should rightfully go until the owner is located. the insurance companies were trying to essentially scam people out of the money that no one ever came looking for. Would have gotten away with it if it weren't for awesome companies like Verus Financial getting all up in their business and questioning their practices.
Yes Stephanie198 you are correct, however, did you not read the press release from the SSA over one year ago saying that they are limiting the access to the Death Masters File. They limit the access the insurance companies get due to too many people stealing Social Security numbers. Due to this they are only listing 1 million peoples death a year eventhough over 2.8 million on average die in the United States. So hopefully when you die you are in the one million that is listed and not the other 1.8 million that is not. This is why there must be a central life insurance database and that is what FindYourPolicy.com is. Is it a good idea, absolutely, is it 100 percent no. If you registered the company name on FindYourPolicy.com you are guaranteeing with certainty your family will always be able to find your policy. We are having a very hard time to get insurance companies on board with us.....go figure. It is up to the individual to take care of their families and register their policies because the insurance companies will not do it for them.
Cancer insurance is a scam. When I tried to collect on my wife they told me the cancer was cured but she died from the treatment. :-(
It's people extorting mail and IDs-I have three LARGE inheritances that the Riverside ,Ca police help a Gypsy jew family that has a tow yard FULL of stolen UN,FBI and CIA undercover Vehicle from MY FAMILIES D.O.T.Wright comm.and UN Vehicles steal my mail and CLAIM I live with them and they lock it in their safe,knowing full well that Angelina Jolie and I downloaded the evidence to International Criminal court.
This is RE Pentagon cuts:
Unpaid Leave-what a load of BULL-SH*T! The unpaid part is a check Russian Gypsy's ,Hispanic and "Ordinary Law enforcement" are extorting.We (Wright Brothers close Blood relative-We won against Bush and Sen.Frankenstien at Crimes against humanity trials"Bush Adm.-ICC)had to ask International Criminal Court to let us into our own Pentagon system to reset because of all the frauds,Cops,Russians and Hispanics in there extorting everything from UN relief ,D.O.T.Wright Commercials and UN Vehicles, other peoples family crests,Bank,utility,and any other kind of an account you could imagine to Pride scooters for the disabled ,and so on-we are working under an ICC order so people CAN'T interfere-oh but that didn't stop the corrupt cops that BLACK MARKETED OUR UN EVIDENCE FOR ICC-happily,ICC heard all,and some cops are just flat out dead.-Treason is real serious,and its just stupid to smart off to my family right now-ears and eyes EVERYWHERE!and we invented and built most of them.
When my grandmother passed away, the life insurance she had paid into her whole life decided they didn't know who she was. She always paid cash, except for once when my mother wrote a check to cover her, and it's because of that one check that we were able to track down that we were able to claim the policy. If it wasn't for that, they'd have just brushed us off and pretended she never existed.
I don't trust insurance companies further than I can spit...Life, medical, auto...they'll weasel out of anything for a buck.
I was in this exact position. When my father passed away over 5 years ago I could not find his life insurance. I figured, as a life insurance agent this should be easy. However, I found out very quickly there is no database you can search to help. So I created one. FindYourPolicy.com is a database where you can register the company name you have life insurance with for free. You only enter the last four digits of your Social Security number, your date of birth and the company name you have life insurance with. This guarantees with certainty your family members will know what company you bought life insurance with. I am encouraging every life insurance company to register all their life insurance clients (for free) so that they can show they are very interested in protecting their clients families from losing the company name they have life insurance with. This will definitly prevent lost life insurance.
This is America. When businesses want $ 1 from you they'll hound you, but when they have to pay up $ 1,000 or $100,000 or $1,000,000, that you rightfully deserve, they'll forget and send a note exactly few days after the documents expire and becomes worthless.
Call it American Insurance Business Scam - AIBC!
insurance companies have always been the scum of our economy, what other businesses lobby for laws that require you to buy their product ??,, (auto insurance for example), or pressure other companies into buying coverage that effect the workplace ??,, oh wait,, I forgot about Obamacare,,,,
I do skip-tracing to locate the owners of unclaimed funds. I have seen instances where insurance checks were addressed to 'unknown' with an address of 'unknown'. The funds eventually end up with the state in an unclaimed funds division. Some states hold the funds indefinitely, while others absorb the funds into the state's General Fund after a specified period of time. In many instances, the insurance companies send the funds to the holder's address of record after the holder has been dead for many years. They make no attempt to locate a beneficiary. It's sad and infuriating at the same time.
In ny, you can contact the office of unclaimed funds, at the comtrollers office in Albany. Be prepared, first have power of attorney forms filled out. Also get a friendly notary, you will be going back alot.
My husband had a policy with Prudential and I was the beneficiary, never heard about the policy until all the funds were depleted paying his monthly premium. He was on Social Security and a veteran, but they unable to verify his death, so they get paying the premium, when they realized their error a $5000. policy had been reduced to $5.42 that was the check I received, when I asked for an explantion...I was told no mailing address was available....so how did they know where to send the check?
I would like to send a sincere "thank you" to NBC News and Producer, Jamie Novogrod, for airing the segment, "UNCLAIMED LIFE INSURANCE MONEY" which was the story of my search and find for unclaimed insurance money. With upwards of $1 billion of unclaimed money, it is vitally important to get this message out to the general public. It is my hope that this segment puts into action two items. First, that everyone either seeing the t.v. segment or reading this message will indeed "search" the database to learn whether they have "unclaimed" money that is rightfully theirs. Second, that even more legislation will be put into law, compelling insurance companies to actively search and find beneficiaries that are due money from policies written by their companies.
I dealt with three insurance companies during my search. Two of the insurance companies fulfilled their obligation to me as a beneficiary by leading me through the necessary process, telling me what documentation was needed and answering my questions. I send my sincere thanks to those two insurance companies and to Mr. Clint Zweifel, Missouri State Treasurer, and his entire staff for their help and guidance. Lastly, the only "negative" experience I had in this journey was in dealing with PRUDENTIAL LIFE INSURANCE. They took every opportunity to stall and make the collection of my money from them a "nightmare" experience from start to finish! It took 13 phone calls to different agents, case managers and supervisors to settle my claim. One phone call alone lasted over 100 minutes, ending with nothing being settled. When I finally out of total exhaustion and frustration told Prudential I was turning my claim over to the Missouri Insurance Commission for investigation things finally kicked into gear. The agent panicked and informed me "Oh, you don't want to do that!" Correction, oh yes I did. The amazing part was that 24 hours after I told Prudential that they were going to be investigated, I received a call from them. They wanted to know how they could help me quickly and expeditiously settle my claim. They said they wanted to do anything they could to help me. Okay guys, is this a coincidence? I think not. The total amount of the claim with Prudential was $1,018.
Thankfully, everything is now settled and I have received the money that was rightfully mine. PLEASE, everyone check the database---you have nothing to lose and everything to gain!
Sincerely,
Christina (Chris) Fox
Thank you for allowing your story to be told.
Would be nice to know the name of the good companies. You were free to name the one company that was difficult....well who was the one that found you in the first place? That is the company I want to do business with.
One thing people can do right now to prevent their life insurance policy from going to the state is update your beneficiary contact information. In some cases, the person may have already died in which case the money would go to that person's estate. In other cases, it may be an ex-spouse or other person that you don't want to have the money.
With as often as people move these days, it's important that your beneficiary contact information remains current.
If the policy has been paid in full but there has been no contact with the policy holder for 3-5 years and there is no evidence of the policy holder's death, then the money gets turned over to the state in the policy holder's name. Only if the death is confirmed does the money get turned over in the beneficiary's name.
It can also be listed in ways you might never think of. For example, where it asks for the last name, enter Estate of; The Estate; Est of; To the Est, etc. In California, this brings up more than 23,000 listings. In NY it's nearly 6,000. It works in most states to varying degrees.
One more thing, life insurance policies issued to veterans through the VA, or policy premium refunds, do not get turned over to the state. They remain with the VA until claimed.
I hope this was helpful.
You can do a lost policy search at www.FindLostLifeInsurancePolicy.com.