SPRINGFIELD – Statewide hearings begin this week to better understand how life insurance companies avoid paying death benefits and what Illinois families can do to prevent themselves from being victimized after the death of a loved one, Illinois State Treasurer Michael Frerichs said today.
Since 2011, the Illinois State Treasurer’s office has identified more than $550 million in death benefits that were not paid to grieving families in Illinois. Nationally, $7.4 billion has been identified.
Frerichs established a task force that includes members of the General Assembly, Citizen Action Illinois, AARP, and the NAACP.
Also invited to be a member of the task force and explain this little-known practice is Chicago-based Kemper Corp. Kemper tells federal officials that requiring them to pay benefits in a more timely manner “could have a material adverse effect on the Company’s profitability, financial position and cash flows.” Three life insurance companies under Kemper’s umbrella sued Frerichs to block an audit that would show if they are holding onto insurance benefits where the insured died years before and the funds are owed to beneficiaries.
Frerichs called for the hearings to educate the public on this questionable practice, to allow other insurance industry members to explain best practices in the timely payment of benefits, and to identify what additional steps might be warranted. The first hearing is 10:00 a.m., Normal City Council chambers, 11 Uptown Circle, 4th Floor. The public is welcome to attend and offer testimony.
The hearings dovetail with legislation Frerichs prompted that now awaits Governor Bruce Rauner’s signature. The legislation would require life insurers to use the federal Death Master File to identify deceased policy holders whose life insurance proceeds have not been paid.
Currently, the treasurer’s office requests compliance audits of life insurance companies to identify unpaid life insurance policies. Frerichs has such authority in his role in safeguarding and returning unclaimed property through Illinois’ I-Cash program.
In Illinois, the state treasurer is tasked with safeguarding unclaimed property, such as life insurance benefits, forgotten bank accounts, and unclaimed rebate checks from retailers. Illinois holds approximately $2 billion in unclaimed property. Individuals can search a database for their name or the name of their business or non-profit at www.illinoistreasurer.gov/