by Brian Mahany
Are life insurance companies holding back a billion dollars or more from beneficiaries? The Florida insurance commissioner thinks so.
Previously we reported on the investigation by Florida and many other states over life insurance claim payment policies. Regulators are upset that insurance companies use social security death data records to immediately stop annuity payments when someone dies but not to pay out life insurance proceeds to families. The insurance companies will use the data to save money but not to pay benefits.
The Social Security Administration shares its death data with private insurance companies. If John Doe purchased an annuity that pays $500 per month for life, insurance companies use that data to avoid paying out monthly benefits once the annuitant dies. These same insurance companies don’t use the data to pay life insurance benefits to the beneficiaries, however. In other words, when its convenient for the company and it saves money, big insurance companies are quick to make use of the data. If you die and the company has to pay death benefits, however, many insurance companies simply hold on to the money.
Thousands of people die each year without the families knowing there is life insurance. Even though the insurance companies know the inured is dead and know who should get the money, they keep quiet hoping no one comes forward. That landed John Hancock in hot water earlier this year. Hancock isn’t alone, other big name insurance companies are also under investigation for the same behavior including MetLife and Nationwide.
Insurance company bad faith practices are not limited to life insurance. Often insurance companies wrongfully refuse to pay homeowners claims or defend their insureds when sued.
Fighting a big insurance company isn’t easy but more and more people are fighting back. Virtually every major insurer has been sued in recent years for bad faith claims. If you think you were wrongfully denied benefits or defense coverage, speak to a lawyer that understands insurance bad faith claims.
Mahany & Ertl is a full service, boutique law firm that concentrates in fraud and asset recovery. From our offices in Milwaukee, Detroit and Portland, we have successfully represented people across the U.S. For more information, contact attorney Brian Mahany at (414) 704-6731 (direct) or at