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Regulators squeeze insurers for unpaid death benefits

Readers of this blog are well aware of our position on the importance of proper estate planning. Regardless of what you think you may have in the way of an estate, the best way for a New Jersey resident to make sure heirs receive the benefits of accumulated assets according to your wishes is by having a solid plan in place.

Another benefit of having a tailored estate plan document is that it provides a way to make sure that benefits owed as a result of life insurance policies are paid out as they should be. Too often, individuals with active policies pass away without ever recording that benefits are due. They go unclaimed. Insurance companies may not bother trying to find beneficiaries so they can hold onto the cash, put it to work and make more money.

Those who think such things don't happen need look no further than news reports this week. They reveal that MetLife has joined two other big life insurance companies in settling claims by state regulators that the firms held on to benefit payouts and weren't as diligent in looking for beneficiaries as they should have been. All it requires is cross referencing the social security death rolls with their own policy records.

A spokesman for MetLife says the company will be paying out $40 million to a number of states as part of the settlement. He says an additional $188 million will be issued to beneficiaries around the country through the rest of this year.

Prudential and John Hancock have reportedly reached similar agreements. State officials say the companies are expected to pay out a sum of more than $1 billion over a number of years as a result of the agreements.

The states stand to gain in some measure, too. In cases where survivors can't be identified or found, MetLife will pay the unclaimed funds to the governments.

Source: The New York Times, "MetLife Settles Cases on Benefits," Mary Williams Walsh, April 23, 2012

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