William Penn Life, 2017 (52. évfolyam, 1-12. szám)

2017-05-01 / 5. szám

Notes from the Secretary's Desk

Created by the Social Security Administration, the Death Master File contains over 94 million records of people who have died in the United States and is constantly updated. If an insurer finds the name of one of its policyholders on this file, then they must contact the policyholder's beneficiaries to process a claim.

Insurers contend that these types of accounts represent less than 1% of all payouts, but regulators point out this amount is still in the billions of dollars.

So, whose responsibility is it?

I think regulators like to embellish the situation just a tad. Think about it, when a family member dies, what's one of the most (and first) common-sense questions asked? You guessed it: did the deceased have life insurance? And from that moment on, a diligent search usually occurs to determine if a policy exists. But it seems many from the regulatory side don't have much faith in the intelligence of most people. Do they really think family members are eager to pay a funeral bill? Most people know the high cost of funerals and that insurance policies, in more cases than not, are utilized for that purpose. Plus, if the surviving family members don't think of it on their own, I'm sure the funeral director will bring it to their attention.

In my opinion (although I may show a little bias, working for an insurer), it should not be the responsibility of the insurance company to initiate claims. Many companies lack the personnel and financial resources

to accomplish such a great task. If a policyholder places their life insurance policy in a shoe box, hides it in a closet and never tells anyone about it, the insurance company should not be obligated to find it.

I believe there needs to be a happy medium. If it is the responsibility of the insured to keep the policy in force by paying premiums, then it should also be their responsibility to notify the policyholder's family, attorney or executor of such policy. It's even a better idea to inform the person who is the beneficiary since they benefit most.

As for policyholders, they can take several key steps to ensure proper payment of future claims. For one, they should keep their life insurance contracts with other important documents, such as deeds, titles and other assets. Also, notify your insurance company immediately when you move. This is something that is often overlooked but is vital to keeping open lines of communication and prevent interruptions with premium billings.

Some state laws allow "Third Party Designations" as a preventative way to keep the policy from terminating. This designated individual—a family member or person with an insurable interest—is not liable for premiums but receives copies of all lapse/ termination letters regarding the insured's policy. This is another avenue for increasing awareness when a policy is about to expire, so it's a good thing to take advantage of, if available.

The goal is to get beneficiaries their entitled benefits. State regulatory commissions support a national standard for life insurers to use the aforementioned Social Security Death Master File to identify policyholders who have died and claims not made. This has resulted in more and more companies utilizing newer technologies and developing protocols to locate beneficiaries of deceased policyholders for initiation of claims.

Several states have also developed their own online search engines to assist consumers. This free service allows individuals to request a search for lost or missing life policies.

I'll discuss this further in next month's issue, along with describing how WPA handles claims and the efforts we undertake to locate beneficiaries of deceased members. I'll also list steps you can take as a surviving family member to discover any unclaimed policies and unpaid benefits.

Please note the above article pertains to permanent plans of insurance that include cash values which extend the life of the policy. Typically, term plans have no cash value and expire immediately after a grace period for non-payment of premiums. Also, the media reports that generated this discussion referred only to commercial insurance carriers; there was no mention of any fraternal benefit organizations. Generally, fraternals have an improved standing when it comes to services to members. However, I thought this subject would be of interest since fraternals issue life insurance certificates and annuity contracts.

'Til next time! □

WILLIAM PENN LIFE 0 May 2017 ° 5