States holding millions in unclaimed insurance money

Wednesday, October 24th, 2012 By

Cash money

There are hundreds of millions of dollars in unclaimed insurance money just lying around, waiting for beneficiaries to claim it. Photo Credit: 2bgr8/Wikimedia Commons/CC-BY-SA

Hundreds of millions of dollars in unclaimed insurance money is just sitting there, waiting for beneficiaries to claim it. They should act in haste, rather than repent in leisure, as states get it if they don’t stake a claim to it.

AIG returns $300 million to states in unclaimed insurance money

Believe it or not, there really is a lot of unclaimed money floating around. Aside from the millions in tax refunds that goes unclaimed and un-cashed every year, there is also a boatload of unclaimed insurance money and a great deal in unclaimed life insurance policies.

For instance, according to the Huffington Post, AIG recently reached a settlement that will send $300 million to 39 states and Washington D.C., all from unclaimed life insurance policies that had yet to be disbursed to the beneficiaries. The $300 million payment follows an $11 million settlement that AIG reached with various state insurance regulators.

The issue stems from AIG not seeking out beneficiaries after the policy holder passed on. Life insurance companies are supposed to regularly check the Social Security Death Index and then pay out the policy but they had not done so.

Number of insurance cos had not

AIG wasn’t alone in not paying out unclaimed insurance money. Similar settlements were also made recently by MetLife, Prudential and Nationwide, with Nationwide agreeing to pay out $7.2 million to regulators.

If insurance money isn’t claimed after a certain amount of time, federal law provides that the funds are held in the respective state the policy holder or last known beneficiary resides in. If they can find the beneficiaries, said beneficiaries can cash in. Beneficiaries don’t always know to look and states don’t always try too hard to find them, either.

There is also a reason why states don’t try too hard, namely that nearly every state has a gigantic backlog.

Millions go unclaimed every year

Many people don’t get just how much unclaimed property there is, especially unclaimed money including unclaimed insurance money. The Department of Veterans Affairs, according to ABC, has unclaimed life insurance money owed to surviving spouses and family of service members, in total more than $33 million unclaimed. Some of the unclaimed disbursements date to World War I. Most are from World War II.

According to the New York Times, the unclaimed monies and property amounts to billions of dollars in monies and other property. New York state alone, by 2011 had taken in more than $400 million since 2000 in unclaimed life insurance, paying out less than $65 million. Overall, the state has paid out 20 percent of the $10.5 billion in unclaimed monies and property it has received since 1943. The state of Florida has more than $335 million in unclaimed life insurance policies and more than $1 billion in unclaimed monies on the books. There is a lot that people don’t know they’re entitled to.

Sources

Huffington Post

ABC

New York Times

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