Procedures for the Disposition of Unclaimed Life Insurance Policy Benefits
S.972 requires life insurance providers to compare their records and policies against the US Social Security Administration’s Death Master File (or a similarly reliable source) twice a year. If a policyholder is deceased, the provider is required to verify it if possible and track down the policy beneficiaries within 90 days. If the beneficiaries can’t be found, the policy benefits are considered unclaimed property and are forfeited to the state.
This bill raises two questions:
- Why is the state requiring this? While it would be a good business practice, there are sufficient laws and procedures already in place to care for life insurance beneficiaries, even in situations covered by this bill.
- Why are the unclaimed benefits being forfeited to the state? Why not let them be reabsorbed into the business?
These issues call into question both the motivation behind and the need for this bill.