Report: Insurers deliberately underpaid life insurance, annuities

| Feb 18, 2020 | Probate & Trust Administration

The loss of a loved one is an emotionally difficult time. It can be made much more complex for those who have been named estate administrator. For them, the job of locating and distributing assets and making their way through complicated legal processes can be overwhelming.

When probate administration includes the task of locating life insurance policies and annuities, the challenges are even greater. Many people leave behind them a bewildering paper trail of financial documents (and often, a lack of critical information) that makes estate administration a job best left to professionals.

Recent news reports have made it clear that major insurers have added to the confusion that is often a part of the probate process. MetLife (a large supplier of life insurance policies and annuities) recently admitted that over the past 20 years, “it has failed to take reasonable efforts to confirm the death of insured parties and notify policy beneficiaries,” according to a news report. Of course, it is obvious why MetLife and other insurers underreport benefits: the companies’ bottom lines are dramatically improved by failing to pay what is owed.

MetLife has agreed to pay retroactive benefits of $189 million and a $20 million fine.

But the problem with this one insurer is the tip of the proverbial iceberg. A task force that looked into underreporting and underpayment found that 25 of the nation’s leading insurers had $7.5 billion in unclaimed benefits. Auditors found evidence that insurers knew that policyholders had died, but they simply failed to inform beneficiaries of existing policies and failed to pay claims, said the former Florida insurance commissioner who headed the task force.

While the report contained remarkably bad news about the integrity of some insurers, there is good news as well: a Brevard County law firm experienced in estate administration can help you find and collect benefits to which you and your family are entitled.