Today, there are life insurance companies that have kept death benefits even when they knew, or should have known, the person who purchased the policy had passed away.
Some companies do so because paying these benefits would reduce their profit margins, according to federal documents and published reports.
To defend their decision, they say no law technically requires them to pay if a family does not apply for death benefits.
However, this thinking implies everyone is prepared for the inevitable.
We know that is not the case. Each of us knows a family whose breadwinner died without telling their spouse about a life insurance policy purchased at work, or the young child left orphaned following a tragic accident, or the elderly matriarch ravaged by Alzheimer’s.
If a company must hang its authority upon the word ‘technically,’ than its actions cannot be considered morally right.
That is why we asked lawmakers to remove any ambiguity with regard to paying life insurance benefits.
The House and Senate agreed and sent to the governor HB 302 - The Life Insurance Reform Act. The legislation would require life insurance companies to review their records from the year 2000 to present and confirm the companies are not holding onto life insurance benefits that should have been paid.
To be clear, most life insurance companies cooperate fully with our request to confirm they do not hold life insurance benefits that should have been paid. Sadly, not all companies share that same responsibility. We pursued a legislative change only when the last argument left on the table was couched with the word "technically."
I hope the governor agrees, and I ask him to sign The Life Insurance Reform Act into law.
Michael W. Frerichs, Illinois State Treasurer