Nonpayment of Death Benefitson April 24th, 2011 at 11:21 am
Investment News reports that, according to Florida’s Office of Insurance Regulation, it appears to be industry practice to track the Social Security Administration’s “death master file” to identify customers’ whose annuity payments can be canceled, but not to use the same information to hunt down beneficiaries of life insurance policies. Some reportedly deducted premiums from the policies of already deceased customers until the policy had been emptied.
John Hancock has settled related state charges brought by the California Controller John Chiang and 20 other states. With the announcement of the settlement, John Hancock denied the allegations, expressed outrage at the “unfounded allegations” in the Controller’s press release, and claimed that the Controller had violated the parties’ agreement. Chiang has promised more action with respect to other insurance companies.
What are the affirmative contractual and other legal obligations of insurers with respect to the payment of death payments? What breach of settlement does John Hancock believe occurred? And what kind of settlement allows a company to deny the allegations while writing a check?
Hancock in Settlement over Death Benefits (4/23/11) (WSJ subscription req.)
“Death Policy” Probe Grows (6/5/11) (WSJ subscription req.)