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Lawsuit: Florida life insurers and unclaimed benefits, part 4

We are wrapping up our discussion of a number of lawsuits, one filed here in Florida, against life insurance companies. The plaintiffs accuse the insurers of holding on to death benefits when the companies know or should know that the insured has passed away.

Over the past couple of years, Florida and several other states have signed settlement agreements with major life insurance companies over the practice. Critics of the settlement say that the deal lacks "teeth," that it amounts to nothing more than the insurers' promises to do better. The company that is the plaintiff in the Florida case believes the insurers are taking the state for a ride.

In another case, not out of Florida, the plaintiff is an individual. This man maintains that the settlement was between the state and the insurance company, not the insurance company and its policyholders or their beneficiaries. That means, he says, he can sue the insurance company for money they did not turn over to him when his mother died.

His experience involved a life insurance policy his mother had purchased. Like others who have complained anecdotally about life insurers, he came across his name almost by accident when he visited his home state's unclaimed property website. The state's records indicated he was owed a little more than $400 in policy dividends.

When he contacted the insurance company, he was told they had no record of a policy for his mother. That story changed a few weeks later, and he received a check for $1,349.71. The check came with no explanation, however, of why the money had not been transferred to the state as insurers are required to do when they cannot locate beneficiaries. Nor was there a copy of the insurance policy or any proof that this was, in fact, the total death benefit that he was owed.

The insurance companies in both of these cases decline to comment on pending litigation but insist they are abiding by the agreements and following the law. Maybe, the plaintiffs are saying to the insurers and the states, that is just not enough.

Source: Legal Newsline, "Others working to make sure insurers dole out unclaimed property properly," Bethany Krajelis, May 2, 2013