As indicated in an article I wrote on May 3, 2016 regarding the withholding of death benefits by insurance companies, there have been some new developments. The insurance industry has had a long standing policy of holding death benefits if they were not contacted by the beneficiary. In other words, the burden was placed on the beneficiary to contact the company and make a claim. Many times, beneficiaries are unaware that they have been designated as a death benefit beneficiary. As a result, no claim was ever filed even though insurance companies have contact information related to the beneficiaries in their database. There was an attempt to obtain federal legislation to change the burden of contact to the insurance companies which was strongly opposed by the industry and its lobbyists. Unbelievably, the insurance companies opposed any change in the law which allowed them to use unclaimed benefits as reinvestment funds for their own gains.
Now, individual states are passing such legislation forcing the insurance companies licensed in their state to locate beneficiaries and pay them the death benefits they deserve. As a result, billions of dollars have been rightfully paid to the beneficiaries rather than utilized by the companies for their own gain.
Kemper Corp is leading the fight against the Florida and Illinois laws that require insurance companies to initiate contact with designated beneficiaries. Kemper has sued both states to retain their contractual provision requiring beneficiaries to initiate the claim. I have previously referred to this as "contractual theft", especially since a beneficiary rarely sees a copy of the owner's policy.
As previously recommended, clients should list all insurance policies, policy numbers and designated beneficiaries on a Schedule attached to the Family Trust/Living Trust. This is especially true if you own a Kemper life insurance policy. This will allow your Successor Trustee or Executor the necessary information to initiate a claim for the insurance beneficiary.