Los Angeles, CA, December 26, 2013 --(PR.com
)-- Life insurance claims, triggered by the Death Master File, are being undervalued for many beneficiaries. A study by the Center for Life Insurance Disputes has found that while life insurance claims initiated from audits by the California State Controller are being paid, no accounting showing the benefit calculations is being provided to the beneficiaries.
Many of these beneficiaries had no knowledge that a policy even existed. It was found to be a wide-spread practice by life insurers to let these policies lapse without ever notifying the insured’s next of kin that they were entitled to life insurance benefits. In settlement with the state of California, 18 of these insurers agreed to find and notify the beneficiaries.
However, the insurers are taking the position that they are not obliged to provide a copy of the insurance policy. The claimant, therefore, has no way of knowing if they are receiving all of the money they are entitled to. The Center also found that there may be significant discrepancies with the way interest is being determined.
The calculation of a life insurance claim payment can include several components. Among them; the policy face amount, cash value, accumulated interest (starting from the date of death), accidental death riders, automatic benefit increases, and demutualization of the insurer. Without a detailed accounting of the claim payment, a beneficiary has no way of knowing whether they are receiving the proper payment.
Consider the substantial amount of interest that is owed on a claim which is 10 or 20 years old. If that interest is not computed correctly, it can mean a big financial loss to the beneficiary.
To date, California State Controller John Chiang has reached global settlements with 18 life insurance companies, with an aggregate value of $2.4 billion belonging to beneficiaries. These 18 companies – which write more than 50 percent of all the issued and active life insurance policies nationwide – have agreed to restore the full value of expired life insurance policies – with interest – and payout future benefits more quickly.
The Center for Life Insurance Disputes is offering a free life insurance claim review for anyone who believes they may not have received all of the money they are owed, especially from the Death Master File settlement payouts.