Minnesota reaches deal with life insurers over unpaid policies

July 24--Minnesotans who should have received payments from life insurance policies but did not, may see some cash in the near future.

The state's Department of Commerce on Thursday announced it had reached a settlement with the John Hancock Life Insurance Company to make sure Minnesotans who are owed money from the insurer receive the payments. It is part of a wave of settlements the state has reached with life insurance companies who had not paid out beneficiaries who were owed money.

"Life insurance proceeds should go to the people they're intended for, instead of sitting in the accounts of insurance companies," Minnesota Commerce Department Commissioner Mike Rothman said. "This is money that belongs to Minnesotans."

After settlements with other companies, Minnesotans have received more than $30 million in previously unpaid insurance claims. The state reached similar deals with Lincoln, MetLife, Prudential, Transamerica and Voya (ING). Those companies have paid the state almost $10 million as part of the settlements. John Hancock will pay Minnesota $900,000.

Settlements with more companies may be coming as part of, what the agency called, "sweeping market conduct examinations by the Commerce Department to identify unpaid life insurance policies and annuities."

Essentially, the state found that the insurance companies lacked systems in place to find and pay policyholders and beneficiaries.

"As a result, in many instances the policyholders had died but no proceeds had been paid," the agency said.

In a statement, John Hancock, a 153-year old company, said: "We are happy to have reached an agreement with the State of Minnesota. John Hancock has a long history of providing needed financial services and products in Minnesota and this agreement will further enhance its longstanding practice of paying customer claims in a diligent and responsible fashion."

States across the country have been checking into life insurance companies' practices and reached a host of settlements with them over non-payments of money due. Illinois, California, Florida, New Hampshire, North Dakota, Pennsylvania, Massachusetts and other states have sought and received settlement deals.

A 2009 investigation by the state of Florida revealed that life insurance companies had used the Social Security Death Master File to track who died and stopped paying annuities but did not use it to track the deaths of policyholders, which would result in payments of claims.

"Many people are never told that they are named as beneficiaries in life insurance policies. As a result, they often have no idea that an insurance payment is owed to them," Rothman said.

Like in Minnesota, in many of the settlements, the insurance companies pledge to do a better job of tracking down beneficiaries going forward and seek out shorted Minnesotans from the past.

John Hancock, like others, has agreed to search nearly 20 years of records to find unpaid policies, "to identify and locate Minnesotans who have not received payments owed to them for policies and accounts held by the insurer."

If you think you are a beneficiary of a John Hancock policy, or a loved one has died and you think they were insured under a John Hancock policy, call this phone number for information: 800-732-5543. Be prepared to provide information such as a policy number, name, address, date of birth or Social Security number.

-- Minnesota Department of Commerce

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