Insurance Company Promises To Look For Dead Policyholders

The Illinois Department of Insurance announced an agreement this week with Nationwide insurance companies to make sure they pay off on life insurance policies and annuities. The Nationwide agreement is part of a nationwide settlement among insurance companies and seven states including Illinois, so far,  to stop the companies' collecting premiums after the policyholder is dead.

Nationwide was one of several insurance companies state regulators claimed didn't pay death benefits despite having access to federal records showing the insureds were dead or even after relatives told them. Instead, said regulators, companies continued collecting premiums by drawing down policy cash reserves, then cancelling the insurance when the reserves were used up.

Nationwide has identified 4,747 unclaimed death benefits, according to the Department of Insurance, and already paid $144.1 million to beneficiaries. The settlement also provides for a $7.2 million payment to be spread among states signing the agreement.

Under the settlement, the four Nationwide companies agreed to regularly check their lists of life insurance and annuity owners against the Social Security Administration’s Death Master File. The agreement becomes effective after it's signed by 20 states. Illinois, California, New Hampshire, North Dakota, Ohio, Pennsylvania and Florida have already signed it.