Tag Archives: Ont needs legislation

2 BIG lessons behind Billions in Unpaid Death Benefits

Unpaid Death Benefits from Life Insurance policies are still very much in the news in the US & that’s not likely to change for a while given that investigations & law suits are still ongoing. All in all, it’s a Sad & Ugly story that includes the use, abuse & non use of the “Death Master File” & Unknown Billions of Dollars in Unpaid Death Benefits. It’s also a reminder & a confirmation of the need to safeguard life insurance policies and share the details with loved ones. 

Unpaid Death Benefits from a Life Insurance Policy

Unpaid Death Benefits

Unclaimed death benefits refers to a life policy where death benefits under that policy have not yet been paid to a beneficiary by the Insurer. In the US, where Unclaimed Property Legislation has existed for some 50+ years, Individual States have become quite ‘proactive‘ or ‘aggressive‘ with Insurers in recent years.  The use of the term Proactive versus Aggressive depends upon whether you are a State or an Insurer & it all more/less relates to the use, abuse or non-use of the US Social Security Administration’ s Death Master File

That’s the file that most State Governments expected Insurers to use to identify deceased life policy owners in a timely manner. However, too many delayed or non payments to designated beneficiaries were suspected to exist and so, a multitude of reviews have taken place over the past 2 years by both State Attorney Generals & State Insurance departments to see whether, and to what extent, insurers had failed to fulfill their beneficiary payment responsibilities. Examinations, Public inquiries, subpoenas, lawsuits and Audits have been BIG news  across the US given the Billions that have been estimated to be outstanding.

A number of States have proudly announced settlement agreements reached with various insurers. Multi State settlements often totaling in the millions are becoming the norm. No wrong doing has actually been admitted to by the Insurers; they have only indicated that the settlements have more to do with moving “things forward”

New York/New York

While actual Go Forward Guidance in the form of changes, new laws and regulations have been slow to materialize, in  December 2012, New York enacted a law requiring insurers to make regular searches of records to identify when a policyholder died and to locate beneficiaries so that life insurance proceeds can be paid.  

And, in July last year,  New York announced that its investigations, which started in July 2011, had resulted in more than $1.1 Billion in unclaimed life insurance benefits being recovered. It was determined that Insurance companies were not using the Death Master file as provided, to search  for life policies that needed to be paid out BUT most insurers were using it to determine when to stop making annuity payments. That’s troubling to say the least.

As a result of New York’s findings, it’s estimated that 100,000 individuals or families across the US including 25,000 from New York received policy benefits. The oldest claim dated back to 1960. Many of those recipients were completely unaware that there was a life insurance policy in place. That made for some emotional press conferences.

In all, $1.15 Billion in recoveries had been made to last July and $339 Million of that was turned over to beneficiaries. The difference will reside with New York State but listed on the States Unclaimed Property website for heirs to find.

It’s unfortunate that the delay in developing uniform guidelines and in providing  better guidance continues to create uncertainty for insurers & delay death benefit payouts further.

Estimates of how much money unclaimed benefits may actually represent across the US vary widely from a few Billion $ to Multiple billion $. No one can yet claim to have an actual number yet outside of describing it as BIG

This may all sound very confusing to those unfamiliar with the Unclaimed Property legislation that exists in many countries like the US (but not Canada outside of Alberta and Quebec) . Many may wonder why each State is being so very proactive.? The answer is that these investigations, audits and new guidelines have major financial implications not just for grateful beneficiaries but also to the individual states as well. That’s due to the fact that in the case of any of those unclaimed death benefits where the beneficiaries may be unable to be located or found; those death benefits will remain with the State & not the Insurer.

New developments are certain to occur shortly, but the real lesson in this story is not about the Greed which would seem to be at play here, but the vital importance of

1) Carefully Safeguarding the details of Life Insurance Policies for the benefit of those you gave consideration to in the first place by making them a beneficiary and

2) Advising those beneficiaries or those close to you about those Life Insurance policies and where the details can be found.

The best person to safeguard your legacy is You.  

LegacyTracker can help. We’ve included a safe & accessible location inside LegacyTracker to  secure your life insurance details. You can also can attach the policy alongside that information. 

LottoMax $50M winner

In Ontario a Lucky Lotto Winner won $50M but Missing Bond Owners have $65M waiting

Sophie Rizavas is ONE lucky Ontario Lady- she’s a new multimillionaire following her jackpot win in the May 9 Lotto Max draw. She won $50M. Nice. (She also won $5 for matching the first 2 numbers of her Encore play).

$50M is a lot of money.  I’ve always thought that such a big win is way too much for just one winner. Who really needs $50 Million? So yes,  I wish more lucky families were sharing this win. I don’t think Sophie Rizavas would even mind that. But due to some very nice timing, I can let you know that there could be other winners in Ontario that don’t even have a ticket. Because, this week I finally found the number. The value of Outstanding Ontario Savings Bonds that have matured but have yet to be redeemed. In my world we call that UNCLAIMED financial assets. The value of those Unclaimed Ontario Savings Bonds as of March 2013 was: 

$56,013,600.00 + Interest of $9,592,169.00 that’s…

$65,605,769 unclaimed 

A letter may have been sent to the owners who originally purchased these bonds, but the owner may have moved or may have died or may be incapacitated and their family has no way of knowing about the Bond. The Ontario Savings Bond Team has indicated to me they “do not have any authority to find the owner(s) of the unclaimed bonds”

I am seeking more info from the Ministry related to these bonds but I’m not allowed to ask many questions given that an election is in progress.   In the meantime, if you have reason to believe that an Ontario Savings Bond has gone missing in your family connect with the Ontario Savings Bond Office. 

1-888-212-BOND (2663)  or visit the website for more info 

Unclaimed Ontario Savings Bonds

Call them if you think someone in your family has misplaced a bond

Law Society Unclaimed Trust monies UP

Yet another indication of the alarming increase in Unclaimed Financial Assets I keep lamenting about…The Law Society of Upper Canada just released their 2013 Annual Report.

Unclaimed Trust Funds increased by $454,215 in 2013 to $3.2 Million

 

Law Society of Upper Canada Unclaimed Trust Funds

Unclaimed Trust Funds (Page 2)
Unclaimed trust funds continue to increase, now totalling $3.2 M as compared to $2.7 M at the end of 2012. These are trust monies turned over to the Society by lawyers who are unable to locate or identify the clients to whom the monies are owed. To date, monies returned to clients from the fund have been nominal. By statute, the Society administers the unclaimed trust funds, in perpetuity, and is entitled to reimbursement
for administrative expenses to a limit of the annual income earned on funds held. Net income, if any, is available for transfer to the Law Foundation of Ontario (“LFO”). To date, administrative expenses have exceeded income and no transfers to the LFO have been made

More from the 2013 Financial Statements regarding  Unclaimed Trust Funds…

10. Unclaimed Trust Funds (Page 22)
Section 59.6 of the Law Society Act permits a member who has held money in trust for, or on account of, a person for a period of at least two years, to apply in accordance with the by-laws for permission to pay the money to the Society. Money paid to the Society is held in trust in perpetuity for the purpose of satisfying the claims of the persons who are entitled to the capital amount. Subject to certain provisions in the Act enabling the Society to recover its expenses associated with maintaining these funds, net income from the money held in trust shall be paid to the Law Foundation of Ontario. Unclaimed money held in trust
amounts to $3,195,000 (2012 – $2,747,000).

Source: Law Society of Ontario 2013 Financials here 

Lost Bonds? Can including them in an RRSP reduce the risk?

Do Bonds Belong in an RRSP?

If it reduces the chance that the Bond becomes a “Lost Bond”  I think that’s a good reason to include Bonds in an RRSP

canada-savings-bondsA recent blog post (April 24th)  caught our interest as posts from the Canadian Couch Potato often do. This particular post was whether or not Bonds should be held within an individual’s RRSP. You can link and read this post here  

The post gave a thorough analysis for readers to consider which including a lot of factors like bond interest being fully taxable (versus dividends/capital gains), asset allocation considerations, comparable yields, RRIF withdrawal rules, foreign tax withholding etc.

The post from Dan Bortolotti was a summary of the work that he and & Justin Bender did in their white paper on the subject  including their full methodology. Their white paper Asset Location for Taxable Investors can be found here 

Again, Dan and Justin’s conclusions were based on a multitude of factors but they concluded that, it would have been preferable to hold bonds in an RRSP during the last decade. Those factors all need to be considered or re-considered going forward. But, I would like to humbly offer another factor going forward for their consideration…the risk of actual physical loss of the Bonds …will keeping the bonds inside an RRSP reduce the risk of them being lost all together ?

Because, the fact is that too many bonds are being lost and ending up unclaimed.

As of last December, the Bank of Canada has $420 Million in Unclaimed/Matured Canada Savings Bonds waiting to be claimed. Earlier this month, I received confirmation that Ontario had $64 Million in Unclaimed/Matured Ontario Savings Bonds as of March 2013, waiting to be claimed.

In both instances, there is no one within the Government looking for those owners. I have volunteered to do so. We will see if they accept my offer because I find it tragically sad that Canadian investors are losing track of their hard-earned financial assets including Bonds. What makes matter worse is that the Unclaimed interest earned by those bonds has most likely been taxed along the way. (Yes, It would be interesting to know if the T5’s reached the bond owner directly or if their returns were reassessed for that interest)

Assumption Alert

I’m going to make an assumption here that there is a better chance that an individual, a loved one or an executor will have a better chance of finding and locating an RRSP than a Bond certificate that could have very well been lost, destroyed, or misplaced somewhere along the way to it maturing. So…on the basis of that Assumption I think Bonds do belong in an RRSP. 

Canada needs Unclaimed Property Legislation

Common Types of Unclaimed Property

Unclaimed property is property that has been abandoned, lost or forgotten by its rightful owner. There are many reasons property can become Unclaimed including often, the death of the rightful owner.

The most common types of financial assets that have become unclaimed are:

  • Bank accounts/Credit Union accounts
  • Over payments made to businesses or deposits such as Utilities
  • Stocks, mutual funds, bonds, and dividends
  • Funds reserved (undeposited) certified cheques, drafts or money orders
  • GICs or Certificates of deposit
  • Pensions
  • Insurance policy proceeds, Insurance refunds and amounts payable resulting from Demutalizations of mutual insurance companies
  • Education Savings plans
  • Prepaid Funeral deposits
  • Tax refunds
  • Mineral interests and royalty payments, trust funds, and escrow account
  • Contents of Safety Deposit Boxes-which may include valuables and sentimental items
  • Uncashed payroll cheques
  • Unused Gift Card balances

And here are some tips on how not to lose these types of financial assets:

  • Cash all incoming deposits promptly and/or setup direct deposit
  • Keep up to date records of all of your financial accounts & contacts like banks, brokers, credit unions, Utility companies etc. Make sure to include the ones you deal with online.
  • Make a separate list of all of the financial organizations you deal with to share with your family
  • Make contact with your financial organizations at least once per year and always ensure that you notify them of any address changes promptly or any changes in ownership of your assets due to death/divorce
  • Make copies of your important documents and ensure that your family knows where to find them and knows about all of your financial assets
  • Provide all of your financial organizations with a secondary contact or beneficiary name and contact address
  • Pay annual fees on items like safety deposit boxes or memberships  on time to ensure that your account does not become inactive

And yes. LegacyTracker will help you keep track of all of these assets and help you share that information with loved ones or advisors so it does not become unclaimed.

California – Not just Good Weather but also Good Info/Action on Unclaimed Funds

Here’s a short video with Good Advice from California’s State Controller Mr. John Chiang who takes the responsibility of returning missing assets to consumers very seriously. Mr. Chiang has $6.9 Billion in Unclaimed Funds, so it’s a very BIG job

The population of the State of California is close by comparison to the entire population of Canada-give or take a Million or so (?) Unfortunately, there is no such comparison of California or any other US State to Canada for that matter, in terms of Unclaimed Fund Legislation. Canada is way behind. But with a population close in numbers to Canada; it would be interesting to know if the Unclaimed Fund Balance of California is a better estimate of what Canada would have if we kept track ($6.9 Billion)

Here’s some charts providing further information on how California seeks to return unclaimed funds to the legal owners and the ever-increasing issue of unclaimed financial assets that is a global problem growing a  fast pace.

 

And some nice charts courtesy of his office at the California State Controller’s Office

Notices mailed out by California

Since 2007, California has been sending over a million notices a year to owners of Unclaimed Property

Securities returned to owners California

Cash returned to Owners

 

 

Property Returned to owners California

 

 

An Ongoing List of Questions that keep me up at night

 

Question 1Question 3Question 2

 

 

 

 

Yes. As a matter of fact. All of these questions have to do with Unclaimed Funds/Assets alternatively known as Unclaimed Intangible Property. Good Guess

Canada

The Bank of Canada provides an online search base for unclaimed balances held in Canadian dollars by federally chartered banks or trust companies that have had no activity for 10 years.  

Question: Why are foreign denominated accounts not available as well? What is the value of these accounts at December 31 2013 ?

The Bank of Canada stopped listing unclaimed accounts in the Canada Gazette as of 2007.

Question: What other search methods are being utilized to look for owners of accounts over and above the online search base? 

The Bank of Canada lists unclaimed bank accounts (Canadian Currency only-See note 1) turned over by federally chartered banks after a period of 10 years of inactivity on the Bank of Canada website for individuals, families and organizations to search.

Question:  Why are Canada Savings bonds that have matured but not been redeemed not available as well? I seem to be the only one in Canada that is aware that the balance of Unclaimed but Matured Canada Savings Bonds totalled $532M at December 31 2013. Why are families not able to search for these unclaimed Canada Savings bonds

Unclaimed safety deposit boxes are not included in Unclaimed fund balances reported on by the Bank of Canada.

Question: What is the requirement that the Bank of Canada makes on federally chartered banks with respect to unclaimed safety deposit boxes?

 Ontario

The Ministry of Finance requires that any accounts where there has been no activity for 10 years or more, be remitted to the Minister of Finance.

Question: What is the total value held by the Minister of Finance and are these accounts recoverable by the legal owners?

The Minister of Finance allows safety deposit box rentals to be terminated for non-payment when held by Ontario Savings Offices and allows for the contents of the boxes to be removed and disposed of by destruction, sale at auction or by private sale. The proceeds are to be remitted to the Consolidated Revenue Fund at the Ministry.  

Question: Are amounts over and above the rental arrears recoverable by the owners?

Bailiff Trust monies that remain unclaimed for 6 months are transferred to the Minister of Finance and may be paid to the legal owners.

Question: What is the balance of such accounts and what are the procedures for making a claim?

Unclaimed court awards are returned to the party against whom the award was made when the amount is unclaimed or otherwise undistributed “after a time set by the court”

Question: What is the general time frame allowed for making such distributions and what actions are taken to look for the parties awarded claims?

Unclaimed Brokerage trust accounts which are held for more than one year are paid to the administrative authority or the Minister of Finance.  The administrative authority must transfer such unclaimed trust accounts after a period of 5 years to the Minister of Finance.  

Question: What is the total value held on account of such accounts and are these accounts recoverable by the legal owners?

Unclaimed collection monies are transferred to the Minister of Finance if they are unpaid for a period of 6 months. The money may be paid to the legal owner upon satisfactory proof being provided to receive the money.

Question: What is the total value held on account of such accounts and what methods of contacting the legal owners are made ?

This is an ongoing list –  I will have more questions for you tonight

 

 

Canada – 34 Million people but Billions in Unclaimed Funds ?

$320M  Now…$500M* in the Bank of Canada (5 year change)

$125M Now    $259M*   in Matured CSBs (5 year change)

LegacyTracker Poster

 

 

+ 20-30% of insurance policies + Pension Funds + Shares + Bonds +

Safety Deposit Boxes + Security Deposits + Credit Union Accounts + Stocks + Dividends + Corporate Bonds + Pension Accounts + Trust Accounts + Prepaid Funeral Deposits + etc. etc.

Estimated Total:

 $4B-$6B (Canada) ?

No one knows for sure

That’s part of the problem

Ontario-2nd try at Unclaimed Intangible Property Legislation

Originally published by LegacyTracker July 25 2013

Despite Ontario being the first province to pass Unclaimed property legislation in Canada (1989), they could not get it all together (the rules) for a period of 22 years later and the Bill was repealed in Dec 2011. Yes. Sad. Many Ontario families are no doubt owed some money.

On the upside they are trying again. Consultations have been taking place and we await next steps. Read about the consultations with the Ministry of the Attorney General here 

My many suggestions to the Attorney General included this one:

No more push to paperless until Canada gets all Provinces on-board with Unclaimed Property Legislation.

Yesterday I received a note from my RESP provider (Invesco Trimark). No more PRINTED semi-annual statements effective 2014. Not cool because this increases the risk that any funds with Invesco Trimark will go unclaimed. But Age Unfriendly as well. Do all Invesco Trimark Investors have online access? Really?

The US considers such legislation as an important component of Consumer Protection Legislation-and it is! So…why are we some 40 years behind? The US has $58B in unclaimed funds/property despite the program but searching for assets is much easier.

In Canada ? The total is at least $4B and the searching is difficult.

USA Unclaimed Fund total is $58B yes $58B

Originally published by LegacyTracker Feb 13 2013

The unclaimed fund balances were recently updated as they are each year..by each State, federal and other organization as required in the United States. That gives us the most recent estimate for unclaimed funds waiting for owners to be reunited with their money:

The new estimated value for unclaimed property is …$58 Billion.

Buried US cash

Again, sad but true.

That’s a lot of money as it works out to approximately $186 per resident of the US. Imagine if that money was all put to use in the economy.

The list of assets included in what the US defines as unclaimed (or abandoned) property (or sometimes referred to as unclaimed assets or unclaimed funds) is quite wide ranging in the US and actually getting wider.

Common forms of unclaimed property in the US includes savings or chequing accounts, stocks, uncashed dividends or payroll checks, refunds, traveler’s checks, trust distributions, unredeemed money orders or gift certificate/cards (in some states), insurance payments or refunds and life insurance policies, annuities, certificates of deposit, customer overpayments, utility security deposits, mineral royalty payments, and contents of safety deposit boxes.

Here’s some further detail on this $58 Billion estimate:

·        $300 Million in pension benefits from employment owed to 38,000 individuals

·        $16 Billion worth of matured US savings bonds (more than 45 million bonds)

·        $153.3 Million in tax refunds that were not deliverable by the IRS

·        $1 Billion in unclaimed insurance policy proceeds

·        $41.7 Billion in unclaimed funds held by individual states.

This last figure of $41.7 Billion is worthy of some further explanation. .While rules vary slightly between each state, specific types of property are considered as being ‘abandoned’ or unclaimed when there has been no activity for 1-5 years. At that point, all financial organizations or any organization holding such property or funds are required to turn them over to the State Treasury.

Each state then takes over the search for owners through websites, newspaper ads, and booths at Malls and events like State fairs and Exhibitions. While searching for the owners, the State can use those assets to fund government operations but the owner’s claim to the property remains intact. Of the $58 Billion in unclaimed funds that has been reported, $41.7 Billion is being held by individual States. .

“The money belongs to the owner in perpetuity. Even if the owner dies, then their heirs could come back and claim it,” said Carolyn Atkinson, West Virginia’s deputy treasurer for unclaimed property and a past president of National Association of Unclaimed Property Administrators.

More on this story:

To learn more about the National Association of Unclaimed Property Administrators and for a link to all State databases : 

NAUPA Website

USA Unclaimed Fund total is $58B yes $58B

Originally published by LegacyTracker Feb 13 2013

The unclaimed fund balances were recently updated as they are each year..by each State, federal and other organization as required in the United States. That gives us the most recent estimate for unclaimed funds waiting for owners to be reunited with their money:

The new estimated value for unclaimed property is …$58 Billion.

Yes, sad but true.

That’s a lot of money as it works out to approximately $186 per resident of the US. Imagine if that money was all put to use in the economy.

The list of assets included in what the US defines as unclaimed (or abandoned) property (or sometimes referred to as unclaimed assets or unclaimed funds) is quite wide ranging in the US and actually getting wider.

Common forms of unclaimed property in the US includes savings or chequing accounts, stocks, uncashed dividends or payroll checks, refunds, traveler’s checks, trust distributions, unredeemed money orders or gift certificate/cards (in some states), insurance payments or refunds and life insurance policies, annuities, certificates of deposit, customer overpayments, utility security deposits, mineral royalty payments, and contents of safety deposit boxes.

Here’s some further detail on this $58 Billion estimate:

·        $300 Million in pension benefits from employment owed to 38,000 individuals

·        $16 Billion worth of matured US savings bonds (more than 45 million bonds)

·        $153.3 Million in tax refunds that were not deliverable by the IRS

·        $1 Billion in unclaimed insurance policy proceeds

·        $41.7 Billion in unclaimed funds held by individual states.

This last figure of $41.7 Billion is worthy of some further explanation. .While rules vary slightly between each state, specific types of property are considered as being ‘abandoned’ or unclaimed when there has been no activity for 1-5 years. At that point, all financial organizations or any organization holding such property or funds are required to turn them over to the State Treasury.

Each state then takes over the search for owners through websites, newspaper ads, and booths at Malls and events like State fairs and Exhibitions. While searching for the owners, the State can use those assets to fund government operations but the owner’s claim to the property remains intact. Of the $58 Billion in unclaimed funds that has been reported, $41.7 Billion is being held by individual States. .

“The money belongs to the owner in perpetuity. Even if the owner dies, then their heirs could come back and claim it,” said Carolyn Atkinson, West Virginia’s deputy treasurer for unclaimed property and a past president of National Association of Unclaimed Property Administrators.

More on this story:

To learn more about the National Association of Unclaimed Property Administrators and for a link to all State databases :

NAUPA Website

Secret life of unclaimed safety deposit boxes

From a story by the New England Cable News Feb 16 2013

Unclaimed Property/Untold Stories

I am sure any day now someone will realize that they could make the story of unclaimed safety deposit boxes a reality TV show but until they do so, I pass along this story by  New England Cable News which shines some light on how the US handles unclaimed safety deposit boxes (for obvious reasons, it fails to shine any light on what happens here in Canada but we will keep trying)

safety deposit boxes

Read the story from NECN here 

In the US, each State takes responsibility for the boxes after 5 years of no activity (most importantly, missed payments) because safety deposit boxes are considered unclaimed property and well, the US has had unclaimed property legislation for about 40+ years.

After reading the story of a typical day of opening abandoned safety deposit boxes in in a typical state like Wisconsin I have a new appreciation of why they REALLY try to return the boxes to the rightful owners.

Hundreds of boxes arrive at this particular office in Wisconsin but each State may vary in the additional amount of time they will hold abandoned items after receiving the boxes from the banks who have already held them for 5 years.. Wisconsin holds boxes for 2 years while Iowa will hold boxes for 10 more years.

“We’ve really tried to push our outreach efforts to let people know about unclaimed funds and getting money back to people,” said Scott Feldt, the deputy state treasurer. “That’s our major effort, that’s why we are here.”

They do so at by way of public events, radio, TV and newspaper interviews. They also publish lists of people owed unclaimed property in various newspapers and in their searchable online database.

More commonly, they hold coins and jewelry, old stamps and personal documents, like wills and marriage certificates. But often times unusual items of no monetary value re found in the boxes and they have no choice but to destroy. This story details some of those finds:

·        One box contained a Band-Aid box and two toenails, wrapped in tissue.·        One box contained an empty envelope.(only)

·        One box contained nothing but spoons.

·        One box contained a Rolex box, but alas, no Rolex.

·        One box contained dental gold, teeth still attached

Some of the items are sold in monthly eBay auctions. The office holds the proceeds for the owner in the event someone later claims them. Perhaps not these particular items but some items that are found to have value are sold in monthly eBay auctions and then the proceeds are held for the owner in the event someone later claims them.

And, while it may depend on the State most Sates will hold onto certain special items ‘in perpetuity’ like photographs and war medals which they know would mean the most…if they eventually find the rightful owners.

All in all, it seems like a fairly civilized and respectful process and transparent… so what is our process here in Canada? It has yet to be told I’m afraid. Or at least, I haven’t found it yet. If you happen to know; please let us know or maybe a new Cdn Reality Show will help us unravel it first….

Mortgage or life insurance

Why? $1 Billion in US Unclaimed life insurance benefits

This story will help provide you with a lot of the “why” …Why I was compelled to develop LegacyTracker…

Revelations from a Consumer Reports investigation in 2013 are still BIG news in the US. For good reason as the revelations were a bit shocking and disturbing to say the least as they related to the fact that at least $1 Billion in life insurance benefits had not been paid out. 

CBS News was one media outlet who followed up on the story (link provided below) But beware, as the video may make you weep both for the individual that purchased and paid for a life insurance policy with their hard-earned/after tax money and the beneficiary who has not claimed the benefits under the policy.

This may not shock Canadians because most of us live in a province or territory that does not have Unclaimed Financial Asset Legislation. But in the US, such legislation has been in place for 50+ years as an integral part of Consumer Protection and that legislation requires all “holders” of financial assets to turn any assets owing to a consumer over to each State after a certain period of time, in order that the State can take on the task of finding those owners.

Therefore, when it was determined that Insurers were not being particularly diligent in turning those unclaimed insurance policies over, a lot of audits, investigations, litigation and ultimately, settlements were initiated along with a lot of excuses from Insurers. Audits found “an industry wide practice of failing to pay death benefits” even though the insurers had access to federal death records.

This was only heightened when it was determined that many insurers were using Social Security’s Death Master file to identify those who had died so they could stop paying annuity payments but were not using that file to find deceased policy holders and payout benefits to their beneficiaries. Yes. Disturbing.

As the reporter notes…”they kinda didn’t want to know that you died so they can keep the premiums coming until they find out you have passed away”.

Mellody Hobson of CBS News summarized in her report:

  • $1+ billion in unclaimed insurance policy benefits have not been claimed
  • 1 in 600 people have unclaimed benefits
  • Payouts range anywhere between $2,000 – $300,000
  • The insurance company had no real legal obligation to look for the beneficiary
  • The insurance companies were reported as saying that $1Billion in unclaimed policies was a “minor problem

The Bottom Line ?

As the CBS reporter concluded

“Ultimate responsibility lies with beneficiary. It sounds so mundane but so many people don’t tell their loved one where the policy is, what the company is and that they are a named beneficiary”.  Agreed. So these are the key “takeaways” from this disturbing story:

  • Know what you own
  • Know what other loved one’s own
  • Know where your spouse’s life insurance policy is
  • Make sure beneficiary information is up to date
  • Make sure your beneficiary knows where your policy is

This story supports the reason why we built LegacyTracker.

Too many assets including insurance policies are being left unclaimed. The detail that you or a loved one needs to provide about existing life insurance policies is a key template built into Legacy Tracker

And the situation in Canada? Even more murky…

We don’t really talk about it in Canada and insurance companies don’t talk about it. What is the value of unclaimed insurance benefits in Canada? It’s anyone’s guess but some within the industry estimate that 20-30% of insurance policies do not get cashed. I am not sure I want to estimate what that total value $ would be; I just know we need to reduce that figure. Please.

Here’s the Consumer Report on Unclaimed Life Insurance Policies

How to Find Lost Life-Insurance Policies – Consumer Reports