When you take out a life insurance policy, you pay premiums in the expectation that when you die your spouse or your children will receive the benefit. But audits of the nation’s leading insurance companies have uncovered a systematic, industry-wide practice of not paying significant numbers of beneficiaries.
In a little-known series of settlements, 25 of the nation’s biggest life insurance companies have agreed to pay more than $7.5 billion in back-death benefits. However, about 35 insurance companies have not settled and remain under investigation for not paying when the beneficiary is unaware there was a policy, something that is not at all uncommon.
Kevin McCarty: The beneficiary never comes forward because he or she doesn’t know the policy exists.
But the companies know, says Kevin McCarty, the insurance commissioner of Florida, who led the national task force investigating the industry. And the companies don’t pay, he says, unless a beneficiary makes a claim.