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KeepUP™ Blog

Bill Berger & Heather Gabell

Recent Posts

3/8/22 10:39 AM

It Pays To Be Proactive When Searching for Unclaimed Life Insurance Owners

Life insurance benefits can go unclaimed for several reasons, such as if the insurer loses contact with an insured, is not aware that an insured has died, or is unable to locate any beneficiaries. Both the insurance laws and the unclaimed property laws require the reporting and remitting of unclaimed life insurance proceeds, and life insurance companies must be mindful of the requirements in each state, which continue to evolve.

As states actively enforce their unclaimed property laws by way of audits, self-reviews, and questionnaires (often with the assistance of a third-party auditor), insurance companies are not immune. A recent investigation by the New York State Department of Financial Services into one life insurer’s practices has led to a settlement under which the insurer must pay upwards of $10 million in restitution and penalties for the failure to pay unclaimed life insurance proceeds in accordance with New York law.[1]

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Topics: Compliance, Due Diligence, Best Practices, Owner Reunification

6/28/21 9:23 AM

Mortality Searches - Worth It For All Holders In The Unclaimed Property Space

Successful unclaimed property compliance programs undertake multi-faceted approaches to find owners of unclaimed funds that may include proactive searches of life status along with other outreach programs. Insurance companies, financial institutions and other holders must follow not only industry specific laws and regulations (such as SEC Rule 17-Ad-17), but they must also actively monitor and comply with the ever-changing unclaimed property laws. A proactive search and review of the life status of owners and beneficiaries will preserve accounts from the escheatment process, thereby decreasing the reputational risk to the holder and the cost of escheatment, while increasing customer goodwill and potentially driving new business.

While there are no statutory requirements that force holders of banking or securities property to determine whether an owner is deceased, death can be a factor in triggering escheatment for some property types. For example, death is a trigger for ROTH IRAs in most states, and in some states, such as Illinois and Vermont, dormancy periods are accelerated for deceased owners of certain property types. In the states that have adopted a version of the 2016 Uniform Unclaimed Property Act (RUUPA), holders of IRAs, custodial accounts and securities must confirm death within 90 days from the receipt of notice or indication of death.

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Topics: Compliance, Due Diligence, Best Practices