A "60 Minutes" exposé has found life insurance companies are not paying out millions of rightfully deserved policy benefits. Few people are aware of a group of settlements worth $7.25 billion involving 25 of the largest life insurance providers although it impacts a large portion of society. It was reached after the court found the companies failed to pay out to policy holders who were entitled to benefits. These 25 companies, and an additional 35 that did not settle, were systematically depriving their customers of their benefits in a seemingly harmless but truly damaging way. In most of the cases, the policy holder's family was unaware that they were entitled to receive the benefits after the loved one passed. This is much more common than people think and thus they did not make a claim, resulting in no compensation. The companies claim their policy is to only distribute compensation if a claim is made by the family member. So the companies are aware that their holder has died (often when they receive the death certificate) but choose to ignore it until someone files a claim in their name. This practice has been taking place all over the country for decades resulting in millions of people being negatively effects and the greedy companies keeping billions of dollars for themselves. The companies involved are the large, popular companies like John Hancock, MetLife, and Prudential. The lobbyists for the companies claim the responsibility is on the holder to make a claim because they signed a contract stating they must make a claim to receive benefits. These clauses in the contract don't always hold up for the companies in court and some states, like Florida, have statues saying the company is required to investigate the situation if they believe their client has died. There are thousands of stories of the company receiving the death certificate and not acting on it. These companies follow state regulations (not federal) and largely run unchecked in their practices. With their large bank accounts, they are able to disproportionately influence how public policy effects them and as a result the consumer is often taken advantage of.
We would like to see the companies have to follow tighter regulations and be monitored more closely in an attempt to protect the public. Usually, our clients have very little leverage in negotiation with these monster companies and are thus treated unfairly. These corporations are often in the business of making themselves money, not helping their clients. Or as one of my professor's stated, "Insurance companies are in the business of collecting premiums, not paying benefits".
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