It's debatable if the fiduciary standard is 'higher' than suitability. But the better question might be, who's holding the bar?
The recent announcement that the state of New York discovered – and has since paid out — some $665.7 million in unclaimed life insurance benefits, has set tongues wagging about how much more might be going unclaimed across the nation.
Television personality and financial columnist Melody Hobson reported that as much as $1 billion is unclaimed nationally. And a separate published report suggested there could be a similar amount unclaimed in Florida alone.
The New York windfall came as a result of a new regulation passed by the state’s Division of Financial Services (DFS) last year that requires insurers to search for unpaid beneficiaries at least quarterly. A DFS investigation begun in 2011 has resulted in more than 89,000 claims being paid across the U.S., according to a news report. That investigation focused on life insurance companies that do not routinely search for beneficiaries waiting instead for claims to be filed.
Under the New York regulation, life insurance companies writing policies in the state are required to search the federal Social Security Administration’s “Death Master File” to identify policyholder deaths and cross-check that data against policies for which no claims had been made.
“Life insurers are now responsible for proactively identifying policyholder deaths and are making good faith efforts to find people so hundreds of millions of dollars in unclaimed benefits can be paid,” New York Gov. Andrew Cuomo said in a statement.
Many life insurance companies and state insurance departments currently offer online and other services to help consumers determine whether they are entitled to unclaimed life insurance funds or related property. The rub, according to several reports, is that many individuals simply don’t know that they are named beneficiaries in life insurance policies.
There have been no reports, so far, of any state planning to follow New York’s lead in proactively requiring insurers to identify unclaimed benefits and seek out likely beneficiaries.
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