Can I choose a third person as my life insurance beneficiary?

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PostPosted: Mon May 23, 2011 11:04 pm   Post subject:   

My guess would be that you are correct. I would argue that these are the policies that are most likely to have no living listed beneficiary. This is especially true if it is employer provided. This is because of the lack of agent involvement primarily. It is very similar to all of the old retirement plans with ex wives as beneficiary.



Ex. Ten years ago Joe took a job with XYZ. They gave him 225K of coverage. He named his mom as beneficiary. She has died. It never crossed his mind to make a change.


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PostPosted: Mon May 23, 2011 11:15 pm   Post subject:   

Sounds good to me.



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PostPosted: Tue May 24, 2011 12:12 pm   Post subject:   

Quote:
The insurance company does need to make a payment, but they don't care to whom the payment is getting paid as long as it is the correct person.




Well, that's generally true. But the insurance company is not required to do much in the way of "investigating" the person to whom they are making the payment either, which could result in a payment being made to the wrong person inadvertently. And they don't necessarily spend any time searching for the beneficiary like they should.



Which creates a different problem that some insurance companies are finding themselves mired in. Seems they know that they are supposed to pay a death claim (using the Social Security Death Index), but they choose not to pay the claim, and instead begin using the cash value to pay premiums until the policy lapses for non-payment.



Not that they wouldn't pay the death claim if the beneficiary comes forward, but the rub is that the money is supposed to escheat to the state if not paid to the beneficiary within a certain period of time. By not paying the money to the state, like California, the state cannot invest the money and earn some tote to use to balance its budget.



Several insurance companies have been sued by the State of California for this practice, are losing the cases (or settling quietly), and the state is going to go after all them one by one.


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PostPosted: Tue May 24, 2011 2:21 pm   Post subject:   

Why and how should/would the insurance company should the insurance company search for a beneficiary prior to receiving a death claim?



The ss death index comes with a disclaimer that information may not be accurate. If someone is on the list, they are probably dead, but is not proof of death.



These cases are from before 1960 and are nothing more than the state of CA being in a financial mess. CA will get some money without any law suits being won. No beneficiaries will benefit from this.


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PostPosted: Tue May 24, 2011 2:24 pm   Post subject:   

By the way, that was a great change of subject to show us how smart you are.


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PostPosted: Tue May 24, 2011 7:25 pm   Post subject:   

I'll let you read this for yourself. (some emphasis added). It's not really a change of subject, except in your own narrow mind.



CALIFORNIA DEPT OF INSURANCE PRESS RELEASE

APRIL 25, 2011



Insurance Commissioner Dave Jones and State Controller John Chiang today announced the issuance of a subpoena and joint investigative hearing into the practices of Metropolitan Life Insurance Company (MLIC), also known as MetLife. The hearing will focus on MetLife's practices regarding payment of benefits under life insurance policies after MetLife learns of an insured's death - either to the beneficiaries or, if they cannot be located for three years or more, to the State's Unclaimed Property program. MetLife learned of the deaths of insureds through a database prepared by the Social Security Administration called "Death Master," which lists all Americans who die.



The Commissioner and the Controller are responding to preliminary findings from an audit the Controller launched in 2008, indicating that for two decades, MetLife failed to pay life insurance policy benefits to named beneficiaries or the State even after learning that an insured had died. The company has a huge number of so-called Industrial Policies, valued at an estimated $1.2 billion, which were primarily sold in the 1940s and 1950s to working-class people. The payments, which were collected weekly, typically were higher than the final death benefit. The Controller's unclaimed property audit indicates that MetLife did not take steps to determine whether policy owners of dormant accounts are still alive, and if not, pay the beneficiaries, or the State if they cannot be located.



Simultaneously, the preliminary findings show, when MetLife knew that an owner of an annuity contract - which generates income for the policy owner at the time the annuity matures - had died, or the annuity had matured, the company did not contact the policy holder or beneficiary, even though it subscribed to the "Death Master" database. Furthermore, MetLife continued making premium payments from the policy holder's account until the cash reserves were used up, and then cancelled the contract.



Today's announcement comes after Controller Chiang last week announced a landmark settlement with insurer John Hancock and following a multi-year investigation aimed at determining whether the insurance industry was in compliance with state unclaimed property laws requiring them to transfer dormant property to the State for safekeeping when the rightful owners, or their heirs, cannot be located. The Commissioner and Controller believe that these practices are not isolated, but are systemic in the insurance industry.



"The thrust of this hearing is to determine whether MetLife, one of the largest life insurers and issuers of annuities in the United States, engaged in unfair practices regarding the payment of life insurance claims to beneficiaries," Commissioner Jones said.



"California families buy insurance to provide for their retirement security and the financial security of their families when they die," Controller Chiang said. "The benefits should be paid to the policy beneficiaries or to the State to return to the rightful owners."



The hearing will be held in Sacramento on Monday, May 23, 2011, from 9:30 a.m. to 11:30 a.m.



================================================



Does it matter if the policies were from the 1940s or 1950s or that the practice continues to this day? Of course it does! There were contracts with agreed upon performances that were dishonored. Will it be a $1.2 billion event? That remains to be seen.



The point is, at the moment of death, the relationship of the life insurance contract changes from owner-insurance company to insurance company-beneficiary. As has been seen in this thread, some people are not sure who the beneficiary is, but the insurance company definitely knows (1) if a policy was in force at the time of a person's death, and (2) who the beneficiary is.



The insuring clause states something like: The Company agrees to pay the Proceeds of this policy to the Beneficiary after receipt of due proof of the death of the Insured while this Policy is in force and to provide other rights and benefits in accordance with the terms of this Policy. Please read this policy carefully. It is a legal contract between the Owner and the Company.



The Social Security Death Index is a form of "due proof of death" (it is, at least notice of a death), and the contract requires payment of the proceeds. Under state laws, the insurance company must pay the claim (often within 120 days of death, or be forced to pay a higher rate of interest). If a named beneficiary fails to step forward of their own accord, that does not relieve the insurance company of its obligation to pay the claim in a timely manner.



================================================



I am not going to dispute the fact that fiscal irresponsibility on the part of the Democratically-controlled legislature, with some assistance from weak-kneed Republicans beholden to lobbying interests, is a probably motivator. The same is true for the state's potential $10 billion fine against United HealthCare for its failure to pay claims on health insurance policies and other market conduct violatlons.



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Last edited by MaxHerr on Tue May 24, 2011 7:53 pm
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PostPosted: Tue May 24, 2011 7:31 pm   Post subject:   

Quote:
Why should we make an assumpion about the owner?




I suppose we should make that assumption since 90% or more of all individually-issued life insurance contracts are owned by the primary insured -- at least at the time of application, if not necessarily, at the time of death.


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PostPosted: Tue May 24, 2011 10:00 pm   Post subject:   

Max, I'm glad you posted this release. I've been in Walnut Creek since 7:50 this morning in meetings regarding this exact case.



Great case...........Get Met, It Pays.



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PostPosted: Wed May 25, 2011 12:01 am   Post subject:   

What bothers me about this case is that the primary motivating force behind this does not have anything to do with helping beneficiaries. This is solely about CA seizing an opportunity to grab some cash.



Max, it does matter that these policies are so old and so small. The SSdi didn't start until 40 years after these policies were issued. Even if the company thinks that a death has occurred, is it their legal responsibility to proactively search for the beneficiary?



Let's assume that someone bought a $500 policy in 1945 and died in 1990 and there was no death claim. What specific steps should Met have taken?


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PostPosted: Wed May 25, 2011 6:50 am   Post subject:   

fdsa, all BS aside - good feedback - seriously.



Quote:
This is solely about CA seizing an opportunity to grab some cash.




You are certainly not alone in your seemingly nonchalant attitude/belief that the DOI is just using this as an excuse to seize an opportunity to grab some cash. In fact, you are among the roughly 60% majority.



What I'm afraid you don't see is the other side of the proverbial coin - the beneficiaries of those who paid premiums for sometimes 50 years and got nothing in return. I've personally interviewed over a dozen people who will ultimately become class representatives in this case.



SSdi aside, insurance companies have the ability to determine, with a phenomenal degree of accuracy, if any of their policyholders have died.



Quote:
is it their legal responsibility to proactively search for the beneficiary?




There's not as much work involved here as you might think. When each and every one of these policyholders applied for insurance, they signed a document giving the insurance company access to their personal information - in every single case. SSI, DMV, and MIB records can all be accessed with the push of a button. The question is: why won't the insurance companies pay someone to push these buttons? Instead, they would apparently prefer to take a chance in a court of law.



Yes, by God, they are obligated to work for their surviving policyholders and/or their beneficiaries. This is not based solely on my expert opinion - it's the law. What right does a company (worth billions of dollars) have to keep that $500 policy purchased in 1945? Put yourself in the beneficiary's shoes - wouldn't you hope someone would help you get what is rightfully yours?



Back in 1994, I wrote the President of Metropolitan Life a letter advising him that I had discovered roughly 400 cases policyholder abuse. In this letter, I asked if I could come to work for his company (as a consultant) and help make these people whole.



My plan, which was laid out in writing, would take 10 years and my fee was somewhere in the area of around $5 million. If this made you laugh, you're not alone because it had the same effect on him. Soon thereafter, I was told they didn't need my help and was threatened with legal action. To date, that little chuckle Harry Kamen got at my expense has cost his company around $300 million.



I'm really glad you have a better than average knowledge of insurance and are not in the group of millions who have been screwed and don't even know it. Use your knowledge to help these people because, you might be all someone's got.


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PostPosted: Thu May 26, 2011 5:17 pm   Post subject:   

I see both sides of the coin. My problem is that the state of CA seems much more concerned with getting the money into their coffers than having MetLife pay beneficiaries.



I'm not on Met Life's side with this issue. I don't have enough facts to take a side. I mostly just have questions and unresolved thoughts.



For instance, if an insurance company knows that somebody dies, but has not received a death claim, are they under an obligation to search for the beneficiary? My thoughts on this is that they have a moral obligation, but not a legal obligation.



If they have no knowlege of death, do they have the responsiblity to search to see if a death has occurred? I think that they neither have a legal or moral obligation in this case.



From a contractual point of view, doesn't the payment of a death claim start with the beneficiary filing a claim? Is the insurance company SUPPOSED to search for people to pay?



I would not be so cynical on this particular issue if CA instead of trying to get MetLife to pay them money instead ordered MetLife to make an effort to find and pay the beneficiaries.



Prediction: There will be no finding of wrong doing and MetLife will not admit to wrong doing, but they will pay a large some of money to CA. CA will be happy. MetLife will be happy. Beneficiaries won't benefit.


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PostPosted: Thu May 26, 2011 10:34 pm   Post subject:   

Again, good feedback.



Quote:
My problem is that the state of CA seems much more concerned with getting the money into their coffers than having MetLife pay beneficiaries.




I completely understand your concern but, is it really, your problem? You simply cannot deny, especially if you live and do business in CA, that a refurbishment of the CA DOI is long overdue - seriously, this should have happened a long time ago. C'mon, we actually had a Commissioner (Chuck Quackenbush) fired for "misplacing" funds from the Northridge earthquake fund. Then he retired to Hawaii. I could tell you stories about some of our regulatory agencies you would probably never believe.



If you are truly on the side of the consumer, be delighted with what's going on, and let's hope other states follow our lead.



Quote:
if an insurance company knows that somebody dies, but has not received a death claim, are they under an obligation to search for the beneficiary?




Really? No offense, but did you give that question any thought at all? I'd love to break that question down for a jury of mostly senior citizens.



Let me re-ask the same question little differently.



Ladies and gantlemen of the jury: Does an insurance company have the right to continue to draw premiums from policyholder they know is dead, hoping the money will run out and the policy will lapse prior to anyone making a claim?



Quote:
If they have no knowlege of death, do they have the responsiblity to search to see if a death has occurred? I think that they neither have a legal or moral obligation in this case.




No, of course not. But Metlife isn't being investigated for what they didn't know, they're being investigated on what they did know and chose to overlook.



Hypothetically speaking; let's say an insurance company (any company) has 500 policies on the books and have reason to believe the policyholders may have passed away. Who gets to decide which policies are investigated and which ones are ignored? In this day and age, when even a little extra money could help someone pay for medication, food, medical expenses, or just the cost of living, who decides which beneficiaries receive money that is rightfully theirs and who doesn't? To me, that's mind-boggling.



Quote:
From a contractual point of view, doesn't the payment of a death claim start with the beneficiary filing a claim? Is the insurance company SUPPOSED to search for people to pay?




On this particular issue, I agree with you 100% but again, you're missing the point.



Metlife is being investigated for cases in which THEY KNEW the policyholders had passed away and instead counted on premiums running out before a claim was submitted.



Quote:
Is the insurance company SUPPOSED to search for people to pay?




No, of course not. Again, they are not being investigated for not properly searching for people to pay.



Quote:
Prediction: There will be no finding of wrong doing and MetLife will not admit to wrong doing, but they will pay a large some of money to CA. CA will be happy. MetLife will be happy. Beneficiaries won't benefit.




I'm afraid I'm inclined to agree with your prediction. Let's hope this changes in the future.


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PostPosted: Fri May 27, 2011 1:04 pm   Post subject:   

Mark, our disagreements on this subject are probably close to nil and probably only exist because I do not have full facts. I was under the (mistaken?) impression that letting policies lapse on dead people was only a small part of this. If Met is guilt y of that, they deserve to be treated harshly.


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PostPosted: Fri May 27, 2011 4:48 pm   Post subject:   

I completely understand your position on this matter. Unfortunately, the public is not entitled to any more information than what is contained in the press release.



I've already spent quite a bit of time "breaking this down" for both policyholders and legal counsel. Here it is in a nutshell:



Several insurance companies, including but not limited to Metlife, have been accused of failing to distribute the life insurance and annuity benefits of deceased policyholders in accordance with policy and State law.



In these cases (around 23 or so that I may or may not have knowledge of) the company knew - beyond a shadow of a doubt - a policy holder had passed away. In fact, in several of these cases, they had been informed by the children (or other family members) of the insured, but took no action because they were not the owners of the policy(ies).



I understand that it can be argued that it was not the company's responsibility to initiate action based on this information. However, with this, or any other type of notice given to an insurance company, the statute of limitations clock is activated.



At this point, a company is required by law to exercise a reasonable effort to determine if the information is accurate - and they have all the information they need to do so. If the information is accurate (whether a claim has been submitted or not) they are required to freeze the account and values within the policy.



If, after a period of time, a claim has still not been filed, they are required by law to report and/or distribute to the State's Unclaimed Property Dept.



Companies have instead, been accused of failing to follow up on reports of deceased policy holders, continuing to draw premiums from accounts - which were supposed to have been frozen, and allowing the policies to lapse prior to notifying the State.



At this point, I have no idea how many of these cases are in CA or, for that matter, the rest of the nation but expect the number to be fairly large.



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PostPosted: Sat May 28, 2011 2:36 am   Post subject:   

My son, Airman 1st Class in the USAF, died in a car accident on May 3, 2011 while at home in Missouri for his grandfathers death. He was married on Feb 10, 2011. He had spoke to me and his brother just a few days before the car accident about his SGLI benefits and said when he enlisted he named me his mother beneficiery, I didn't really discuss this to much cause I told him nothing was going to happen to him, anyway his so called wife lived with him for a total of 11 days at his duty station in Florida, it is at this time I believe she changed his SGLI benefits on his computer into her name. I've looked at the website and it is pretty simple process to do. Her mother and her were on the phone filing for benefits from the SGLI and car insurance company by 7am on the 3rd of May and he died at 1am on the morning of the 3rd of May. I don't know how they had all the info and was able to file and settle so fast, besides that was the furthest thing from his father and I minds, we were preparing to bury our oldest son. I contacted the insurance companies in recent days which will not even speak to me about any of it, I am his mother. What do I do? This was my son, and my rights as a parent doesn't seem to matter, pleaselet me know what i can do to gain access to the info so i can see when it was changed because I believe she changed everything without his knowledge of it. Sincerely, Christian's mother and hope for justice.


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