A life insurance policy is a great way for men and women to leave behind money for their loved ones after death. However, a life insurance policy is rendered meaningless when that money is never delivered to the beneficiary.
Many state officials, including those in Florida, have accused life insurance providers of not putting in an effort to locate beneficiaries who are in line for money once the policyholder has passed on. In fact, the Florida Insurance Commissioner claimed that insurance companies owed beneficiaries at least $1 billion combined, but also added that the total may actually be as much as several billion dollars.
Investigations into these claims proved there is some merit to them. Generally, insurance providers do not keep tabs on policyholders and leave it up to the beneficiary to determine when their loved one has died and if they are entitled to money. This is especially unacceptable as insurance providers could turn to the Social Security Administration's Death Master File to help determine the status of policyholders. This system tracks almost all of the deaths in America from the previous 75 years.
Officials that regulate the industry ordered that insurance providers use the Death Master File, but in November of last year, the Social Security Administration announced that it would not longer update the file in fear the system could be compromised by identity thieves.
Luckily for beneficiaries, one of the largest public data providers and will take a list of policyholders and cross reference it with over 10,000 sources to determine which of them has died. This will help beneficiaries get the money they rightfully deserve in a shorter period of time.
Source: FOX Business, "LexisNexis helps life insurers search for missing beneficiaries," Ed Leefeldt, April 16, 2012