Fight Brewing in Illinois Over Unclaimed Life Benefits Bill

[Brian Anderson]

Lots of states have passed bills in recent years mandating that insurance companies must search for beneficiaries of unclaimed life insurance policies when the policyholder dies.

Illinois is currently considering House Bill 4633 – the Unclaimed Life Insurance Benefits Act. Turns out the bill may violate contract clauses in the state and federal constitutions…

http://www.chicagobusiness.com/article/20160825/NEWS01/160829917/biz-groups-mount-last-ditch-effort-to-kill-life-insurance-reform-bill

Analyst: Illinois' Unclaimed Life Insurance Benefits bill may be illegal | Sangamon Sun

Think the insurance companies are a bit upset about the profitability of companies like Verus Financial and Kelmar in conducting audits for state treasury departments - and states looking at the audits as an opportunity to fill state coffers

 

[MichaelBurton]

This is one of many very sticky issues that underscore the unique and highly dissonant place that life insurance occupies in our society and culture.

On the one hand, life insurance is the modern answer to the challenge of benevolent care of widows and orphans. It is "more noble than any church, more stable than any government." It fought to the battle to ascend to that moral high ground. And it won. Should it not pursue lost beneficiaries to the ends of the earth? How could it not?

On the other hand, this is a for profit endeavor that must remain geared to the cold steel of Chronos. And a contract is a contract, dammit. You have to file the claim to get the dough! This ain't benevolence! This is business!

Very messy.

 

[paytoplay]

I have seen companies undertake major efforts to pay relatively small claims. They do so with limited information on how to locate the beneficiaries.

Meanwhile, if the policy proceeds are sent to the state (the designed outcome of these laws), then the state does ABSOLUTELY NOTHING other than list the property as unclaimed on its web site. Unlike the insurance company, the state has tax records, property records, license plate/DMV records, etc. etc. such that they can easily find the beneficiaries. If they required themselves to do half as much as what they require the insurance companies do then these laws designed to fill state coffers wouldn't see the light of day.