Life Insurance Companies Investigated in California
Ten life insurance companies are under investigation in California for examinations of their market conduct and failure to pay life insurance benefits to beneficiaries or to the state after learning of the death of the insured.
Subpoenas were issued, and questioning promises to be tough in the investigative hearings before California Insurance Commissioner Dave Jones and State Controller John Chiang.
According to Jones, he has discovered evidence that the U.S.’s largest insurance company, MetLife, failed to pay benefits to beneficiaries or the state after learning that an insured had died. During the hearing for MetLife, it was revealed that hundreds of millions of dollars in life insurance go unclaimed each year simply because beneficiaries do not know the money exists.
“Do [insurers] use cash values to pay themselves premiums after the death of the insured?” the California investigators asked after a presentation given prior to the testimony of MetLife.
MetLife denied doing anything illegal, saying they follow state protocol by turning benefits over to the state when beneficiaries can’t be located. However, the percentage turned over by MetLife in unclaimed benefits is miniscule in comparison to death benefits paid on individual insurance policies—less than 0.2 percent.