Posted on Wednesday, 21st December 2011 by Keane Unclaimed Property Team
On December 16, 2011, Kentucky Representative Robert R. Damron proposed a new law known as the Unclaimed Life Insurance Benefits Act. The proposed law would impose requirements on life insurance companies similar to those found in the model law passed by the National Conference of Insurance Legislators (NCOIL) at the end of November – which requires life insurers to match Social Security Death Master File (DMF) records, or an equally comprehensive service, with in-force life insurance policies and retained asset accounts (RAAs) each quarter.
Kentucky’s proposed law includes the following requirements:
- Like NCOIL’s model law, life insurance companies would be required to perform a comparison between its in-force life insurance policies and RAAs against the DMF, or equally comprehensive service. This comparison must be performed on a quarterly basis at minimum.
- If during this process, the life insurance company identifies a match with one of its insureds, they must complete a good faith, documented effort to confirm the death and determine whether benefits are due. This must be done within 90 days.
- If benefits are due, the insurer must use good faith efforts to locate the beneficiary(ies) and provide appropriate claim forms or instructions on how to make a claim. When permitted by law, the life insurance company may disclose some personal information about the insured or beneficiary to help identify other potential beneficiaries or entitled heirs. Life insurance companies would not be permitted to charge insureds, account holders, or beneficiaries any fees associated with the search or verification processes.
- The benefits from a life insurance policy or RAA (plus any applicable accrued interest) would be payable to the designated beneficiaries or account owners. In the event that they cannot be found, the benefits would escheat to the state as unclaimed property.
It’s important to note with this last point that if the statutory dormancy period expires and no beneficiaries have submitted a claim, the insurer would have to notify the state Treasurer that the beneficiary or RAA holder has not come forward. The insurer will also have to submit proof that they complied with this Act and were still unable locate a beneficiary. Once this notice has been filed, the assets – plus interest – can then be escheated to the Kentucky State Treasury.
The law also provides recommendations for group life insurance. In this instance, insurers would only be required to confirm a death if the insurers provide full record-keeping services to the group policyholder.
This request has been pre-filed for the 2012 legislative session. We’ll be sure to provide the latest as this unfolds. It is likely that the model law, or variations of it, will be proposed and discussed by many states across the country starting in January when the legislatures return to session. Since this has been a prominent issue over the last year, it is likely that we will see examples of this type of legislation being passed into law at some point in the 2012 legislative season. We will continue to track those developments and share them on this blog throughout the year.
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