Posted on Friday, 13th January 2012 by Keane Unclaimed Property Team
A second state has now introduced a bill proposing periodic death master file searches and more routine life insurance beneficiary location. In what is likely the beginning of a trend, Tennessee has proposed rules similar to those found in the Model Unclaimed Life Insurance Benefits Act recently adopted by the National Conference of Insurance Legislators. Specifically, on January 10, 2012, the Tennessee legislature filed House Bill 2283 proposing the Unclaimed Life Insurance Benefits Act. The provisions contained within this bill are almost identical to those found in the recently proposed Kentucky bill. To summarize, here are the key points of Tennessee HB 2283:
- Life Insurance providers are required to complete a thorough comparison of its in-force life insurance policies and retained asset accounts (RAA) against the SSA Death Master File (DMF) or other comparable database or service. This must be performed on a quarterly basis at a minimum, using criteria reasonably designed to identify potential matches of its insureds.
- If a match is identified, the insurer must complete a good faith, documented effort to confirm the death of the insured and determine whether benefits are due within 90 days.
- In the event that benefits are due, the insurer must also exhibit a show of good faith in their beneficiary location efforts and provide appropriate claim forms or instructions to each beneficiary to make a claim. This includes 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 whom 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.
- Any benefits due, plus any applicable accrued interest, shall first be payable to the designated beneficiaries or owners. In the event those beneficiaries or owners cannot be located, the benefits will escheat to the state as unclaimed property.
- With respect to group life insurance, insurers are only required to confirm the possible death of an insured when they are providing full record-keeping services to the group policy holder.
- Upon expiration of the statutory escheatment period, the insurer shall notify the Treasurer that the beneficiary or retained asset account holder has not submitted a claim and the insurer complied with this Act and was unable to contact the retained asset account holder or any beneficiary. Upon such notice, the insurer must submit the unclaimed life insurance benefits or unclaimed retained asset accounts, plus any interest, to the Treasurer.
Tennessee is the second state to propose such legislation in less than a month, and it’s likely that other states across the company will follow suit. The purpose is to institute more stringent and proactive use of the Death Master File, ensure that regular life insurance beneficiary location policies are established, and to allow policy benefits that can’t be reunited with the beneficiary to be escheated to the states as unclaimed property. Given the timeframes involved, insurers will need to employ proactive beneficiary location and communication services (that have not previously been necessary) in order to minimize escheatment. Check back in the coming weeks, as Tennessee may not be the last domino to fall in this chain of events.
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