Illinois State Treasurer Mike Frerichs wants to make sure that, when a life insurance policy-holder dies, insurance companies seek out the beneficiaries -- and don’t try to avoid paying them.
Frerichs says some insurance companies are sitting on funds that belong to the beneficiaries of deceased loved ones to boost the companies' profit margins.
The Democratic Treasurer is urging Gov. Bruce Rauner to sign House Bill 4633, requiring insurance companies to check regularly to see if a policyholder has died and make an effort to find beneficiaries.
The measure passed both chambers of the General Assembly unanimously last month. Frerichs says the majority of insurers are doing the right thing, but others are hurting the industry.
“Some life insurance companies take these unpaid benefits and unpaid monies -- and the millions of dollars interest they make by choosing not to pay them – into their profit margins," he said. "That is unacceptable.”
The legislation would require these companies to check the federal Death Master File to determine if a policy holder has died and if death benefits have been paid. Under the bill, if a match is found and beneficiaries don’t file a claim within 120 days, the insurer would be required to make a good-faith effort to seek them out.
Frerichs, who held a press conference Monday in Champaign, says three insurers under the Kemper Corporation have sued him to block the measure, saying they have no obligation to actively seek out death benefit recipients.
“We found when legislators knew that they had constituents making their premium payments when it was required," he said. "But when they died, some of them, their beneficiaries weren’t being paid. We’ve just heard some really heartbreaking and touching stories about people who were not receiving benefits and from individuals who did, and what it meant to them.”
Frerichs says one recipient was orphaned at age 16, and only learned years later that his late mother had a $100 thousand life insurance policy.
The Kemper suit was filed after Frerichs sought an audit of the companies to see if they were holding life insurance policies that could have been paid but have become unclaimed property under Illinois law.
Other backers of the bill include AARP, the Union Life Insurance Company, and the Veterans of Foreign Wars.
Frerichs will be in Rockford for a news conference on this subject at 10:30 a.m. this morning at the Zeke Giorgi Center, 200 S. Wyman St.