As states intensify their investigations into the handling of unclaimed death benefits by life insurance companies, two Ohio firms —Western & Southern Mutual Holding Co. and Columbus Life Insurance Co. — find themselves named in a federal lawsuit claiming they neglect to routinely compare sold policies to the Social Security Administration’s “Death Master File”. Insurance regulators and other consumer advocates contend that such a practice would ensure that beneficiaries are paid unclaimed death benefits in a timely manner.
The Death Master File is a database maintained by the U.S. Social Security Administration (SSA) listing all Americans who have died. Insurers use the database to stop annuity payments that end at the payee’s death; however, according to regulators in several states, insurers are not using the file to identify deceased policyholders to make certain that beneficiaries are appropriately paid death benefits. Because of this, life insurance benefits—to the tune of about $1 billion nationwide, according to Best’s News Services—go unclaimed because beneficiaries don’t know they are entitled to a death benefit. [Read more...]