By Jennifer Mayerle, May 18, 2016
People pay into life insurance policies with the expectation that loved ones will benefit when we die.
But WCCO discovered the State of Minnesota has sued several companies for not paying beneficiaries, to the tune of tens of millions of dollars. Many have settled, but even more companies are pushing back, saying they shouldn’t have to pay.
Brad Hokanson enjoyed going to Gopher games with his dad, Stan.
“It was this guaranteed time that we could meet,” Brad Hokanson said.
Sometimes Stan would bring up his will, and insurance papers.
“At the time when you’re younger a lot of it goes over your head, and that will come up later, and I don’t have to worry about it,” Brad said.
In 2002 when his dad died, Brad was the executor of the estate handling everything he knew about. Ten years went by before Hokanson learned his dad’s life insurance company owed him more than $10,000.
“It could have been more dire situations for us financially, but that wait was something that was a little bit off-putting,” Hokanson said.
“They have been holding on to a gold mine of money that really belongs to beneficiaries,” Commissioner Mike Rothman of the Minnesota Department of Commerce said.
Rothman was outraged to learn insurance companies knowingly didn’t pay on policies.
“It’s unconscionable when an insurance company knows their policy holder has passed away, kept the money and then used it for investment and then not pay beneficiaries the rightful money that they’re owed,” Rothman said.
In many cases, he says the beneficiary didn’t know about the policy. The life insurance company had the name and contact information but never contacted them, only paying out if a beneficiary filed a claim.
“It’s unfair clearly, and it’s not their money and it’s tantamount to theft in a way,” Rothman explained. “These are the largest brand name national insurance companies throughout the United States.”
The state has settled with: Met Life, John Hancock, Lincoln, Prudential, Transamerica, AXA, Jackson National, New York Life and Voya. The commerce department found more than $200 million owed to Minnesotans. So far, companies have paid $143 million to beneficiaries. Another $31 million ended up with the state as Unclaimed Property for relatives companies couldn’t reach. Other insurance companies that owe money are pushing back.
“They say people haven’t made claims,” Rothman said.
“Some people may need the money substantially if their loved ones die,” Brad Hokanson said.
This experience has left Brad thinking about his own policies.
“What should I be doing is making sure all my accounts are fairly clear so that my wife now knows where my money is and what she should be addressing when eventually I pass away,” Hokanson said.
Rothman said sharing that information is your best defense.
“If you expect your insurance company to pay your beneficiaries when you die, they’re not doing that. You should make sure to get the information to your family, keep the information in a safe place, so it doesn’t happen to you,” Rothman said.
Under the settlements, insurance companies are required to notify beneficiaries.
Read the article at https://minnesota.cbslocal.com/2016/05/18/life-insurance-lawsuit.