New legislation requires insurers to locate, pay beneficiaries
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A bill signed Friday by Gov. Bruce Rauner will require insurance companies to make sure unclaimed life insurance money is paid to beneficiaries.
The Unclaimed Life Insurance Benefits Act requires insurers to use a national death database to identify policyholders who have died and ensure their beneficiaries receive their benefits.
Rauner’s administration also launched the Life Policy Locator Service, a free website Illinois residents can use to determine if they are the beneficiary of a life insurance policy or annuity contract left to them by a deceased loved one.
“Many times finding life insurance policies can be difficult and time consuming after a loved one’s death,” Anne Melissa Dowling, acting director of the Illinois Department of Insurance, said in a statement. “This search service eliminates the confusion of trying to locate missing life insurance policies or annuity contracts and helps get those benefits to the intended beneficiary.”
Illinois Treasurer Michael Frerichs’ office said it has identified more than $550 million in unpaid insurance proceeds to beneficiaries in Illinois.
Frerichs began holding statewide hearings the week of Aug. 17 to educate the public on how life insurance companies can avoid paying death benefits. At an Aug. 24 hearing in Chicago, the treasurer said insurance companies “count on a certain number of policies not being cashed.”
Greg Rivara, a spokesman for Frerichs, said the hearings are also being held to identify other areas where legislation regarding life insurance might be needed. The next hearing is set for Sunday at John A. Logan College in Carterville, Ill.
Frerichs was not available for comment, but his office issued a statement.
“I’ve never met a man or woman who purchased life insurance with the expectation that the death benefits would stay with the insurance company rather than their family,” Frerichs said. “Life insurance policies are purchased to help families push through difficult times. Today, grieving families no longer will be victimized by unscrupulous life insurance companies.”
Kemper Corp., headquartered in Chicago, is one of the nation’s largest insurers and has openly opposed the legislation. The corporation sued Frerichs last year to block an audit of the company’s database of policyholders to identify people who could be owed life insurance benefits.
Kemper Corp. did not return immediate requests for comment.