22 States Reach Life Insurance Agreement with Boston Insurer
John Hancock Life Insurance Co. has reached an agreement with nearly two dozen states to settle a dispute over how the Boston insurer pays life insurance policies and annuities. The move comes after 35 states and the District of Columbia audited the company, alleging that it abuses its policies and contracts, not paying properly after a person dies.
John Hancock Mismanaged Beneficiary Funds
The insurance company is required under its contracts to properly pay beneficiaries after a policyholder dies. If the insurance company cannot find the beneficiaries, states like California have an unclaimed property program that has businesses send lost or abandoned financial accounts to after three years of inactivity to safeguard them from being spent or lost.
According to reports, the company didn’t send beneficiaries money and didn’t shift the funds to the unclaimed property program.
In one case, John Hancock reportedly used the cash value of a life insurance policy to pay an individual’s premium over a seven-year period. The person died in 1999, yet the beneficiaries never were sent any payments and benefits were never sent to the controller’s office.
Company Vows to Improve Claims Practices
To settle the dispute, Jonathan Chiel, executive vice president and general counsel for John Hancock, says the company will now improve its claims practices.
Under the agreement, the company is now required to do a better job of identifying deceased policyholders and also notifying their family that they have money waiting for them. In California alone, the values of more than 6,400 accounts dating back to 1992 will be restored.
According to the California controller’s office, John Hancock was one of many insurance companies audited. It was just the first to be held accountable for its actions.
The other states involved in the settlement were Kentucky, Texas, Georgia, Idaho, Oregon, Illinois, New Jersey, Louisiana, Pennsylvania, New Hampshire, Maine, Massachusetts, Tennessee, Maryland, South Dakota, Michigan, Utah, Mississippi, Montana, North Dakota, Wisconsin, and the District of Columbia.