Life Insurance providers in Maryland will soon be held to a higher standard for locating beneficiaries and verifying decedents as Maryland Legislature passed its version of the Model Unclaimed Life Insurance Benefits Act on May 2, 2012. Insurers will be required to conduct regular comparisons of the Death Master File against their in-force policies to confirm decedents, as well as make good faith efforts to seek out and locate beneficiaries.
With the recent passing, Maryland has joined Kentucky as the first two states to enact such legislation. Alabama, Tennessee, and New York have proposed similar legislation based on the NCOIL Model, but the proposals have not yet been signed into law by their respective Governors.
You can view a map showing the status of each proposal of the NCOIL Model Unclaimed Life Insurance Benefits Act here.
The Maryland law provides the following:
- Life Insurance Companies are required to perform a comparison between in-force life insurance policies and retained asset accounts against United States Social Security Administration’s Death Master File (“Death Master File”) or any other database or service that is at least as comprehensive as the Death Master File. The comparison must be performed on at least a semi-annual basis using criteria reasonably designed to identify potential matches of its insureds.
- If there is a match with one of its insureds, the insurer must, within 90 days, complete a good faith, documented effort to confirm the death of the insured and determine whether benefits are due.
- If benefits are due, the insurer must use good faith efforts in locating beneficiaries and provide appropriate claim forms or instructions to each beneficiary to make a claim, including the need to provide an official death certificate if applicable under the policy. To the extent permitted by law, the insurer may disclose minimum necessary personal information about the insured or beneficiary to a person who the insurer reasonably believes may be able to assist the insurer in locating the beneficiary or other entitled person. An insurer may not charge insureds, account holders, or beneficiaries for any fees or costs associated with the search or verification.
- The law authorizes the Maryland Insurance Commissioner to adopt regulations.
- The law provides that the failure of the insurer to comply with any provision adopted under this Act is an unfair claim settlement practice under certain provisions of law.
This law becomes effective on October 1, 2013.