Hartford, MetLife and Prudential Life Insurance Companies Bill Deceased Policyholders

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Most life insurance policyholders expect to pay a bill each month for the service they’ve acquired. The idea is to make their premium payments now so that their loved ones can receive life insurance benefits after policyholders have passed away.

But a recent story from ABC News has revealed that some policyholders are still making payments on their life insurance — after they’re deceased. As a result, companies like Hartford, MetLife and Prudential are on the hook for millions in payment to beneficiaries.

Life Insurance Companies Continue to Bill Deceased Customers

Several major life insurance companies have been accused of billing their policyholders after they’ve died, as opposed to sending payouts to their beneficiaries.

While the companies have not outright mailed billing statements to the deceased policyholders’ homes, they have allegedly pulled money from cash reserves that were intended for beneficiaries.

Under normal circumstances, when a policyholder dies, the beneficiary files a life insurance claim with the insurance company to claim their benefits. In anticipation that some beneficiaries may not file claims, however, insurance companies are required to check a Social Security Death Master List, which regularly updates deceased citizens.

Once insurance companies recognize that a policyholder is deceased, they are required to reach out to beneficiaries to alert them of any life insurance benefits due.

But in cases where customers paid their premiums out of their own cash reserves — as opposed to making physical monthly payments — investigators have found that some companies continued to pull premium payments after policyholders had died, depleted cash reserves, and then cancelled policies.

Beneficiaries to Receive $763 Million in Life Benefits

Controller John Chiang of the State of California determined that 11 insurance companies — including MetLife, Prudential, Transamerica, AIG, Hartford, John Hancock and TIAA-CREF — are on the hook for millions in unpaid life insurance benefits.

According to the audit conducted by Chiang’s office, some insurers chose not to routinely cross-check the owners of dormant accounts with government databases listing the deceased, while other “companies had direct knowledge of the policy owner’s death, but still did not notify the beneficiaries.”

The companies admitted no wrongdoing in the audit but reportedly have agreed to a settlement that will result in them paying some $763 million owed to heirs of the deceased.

“I am pleased that these 11 companies have come forward and agreed to do what is right by their clients,” Chiang said in the statement announcing the settlement this week. “Too often, insurers have sidestepped their legal responsibility to make good on insurance policies purchased by their clients to provide peace of mind and financial security to their families.”

(Image courtesy of Stuart Miles / FreeDigitalPhotos.net)