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IN CASE YOU MISSED IT….CBS News’ 60 Minutes: “Not Paid: Life Insurance Industry Under Investigation”

4/18/2016

 
“Not Paid: Life Insurance Industry Under Investigation”
CBS News: 60 Minutes
Air Date: April 17, 2016
To View the Episode and/or Read the Full Transcript Click HERE

When you take out a life insurance policy, you pay premiums in the expectation that when you die your spouse or your children will receive the benefit. But audits of the nation's leading insurance companies have uncovered a systematic, industry-wide practice of not paying significant numbers of beneficiaries.

In a little-known series of settlements, 25 of the nation's biggest life insurance companies have agreed to pay more than 7 and a half billion dollars in back death benefits. However, about 35 insurance companies have not settled and remain under investigation for not paying when the beneficiary is unaware there was a policy, something that is not at all uncommon.
 
Excerpts from the transcript:

Kevin McCarty: The beneficiary never comes forward because he or she doesn't know the policy exists.

But the companies know, says Kevin McCarty, the insurance commissioner of Florida, who led the national task force investigating the industry. And the companies don't pay, he says, unless a beneficiary makes a claim.

Kevin McCarty: And what we found is that companies have actual knowledge in their files that people have died, yet they have neglected to initiate an investigation and pay the claim.

Lesley Stahl: So in other words, life insurance companies are failing to pay out death benefits when they know the person is dead, and they're claiming they don't know.


Jeff Atwater: You're talking about millions of policies.

Lesley Stahl: Millions?

Jeff Atwater: Hundreds of thousands of policies that we're dealing with just here in Florida.

..

Jeff Atwater: You can assume from what we have found that the policies that should have paid out in the 60s, in the 70s, in the 80s, in the 90s were never paid.

Lesley Stahl: And you're saying it's part of their plan?

Jeff Atwater: After all we've looked at, Lesley, it would be hard to imagine. This is not a small dollar amount. These are billions of dollars that now stay in the investment accounts of these insurance companies rather than return money to those families.