Insurance Committee Endorses Rep. Terry’s Measure to Protect Life Insurance Beneficiaries

AUGUSTA, Maine, May 2 -- The Maine House Democrats issued the following news release:

People in Maine would be notified if they are the beneficiary of a life insurance policy when the policyholder has died if a bill unanimously approved by the Legislature's Insurance and Financial Services Committee becomes law.

"Sometimes, the beneficiary knows that a policy exists and can inform the insurance company that their loved one has died," said Rep. Maureen "Mo" Terry, D-Gorham, the sponsor of LD 1229. "But what if you don't know that you are a beneficiary? It's hard to believe that an insurance company wouldn't notify you, but under current Maine law, they don't have to."

There have been millions of cases across the country where insurers knew that a policyholder had died but, because official claims weren't filed, were able to cancel the policies for non-payment and kept the death benefit for themselves.

In some cases, if the insurance company had access to the policyholder's retirement account, they continued to charge for coverage after the company knew they had died. Not only did they avoid paying out the death benefit, they also drained retirement savings that should have gone to the family.

LD 1229 will now go to the full House of Representatives for approval.

Rep. Maureen "Mo" Terry is serving her first term in the Maine House of Representatives. She is a chef and small business owner with more than 25 years of experience in the food service industry. She serves on the Taxation Committee.