The bill is designed to enhance consumer protection by ensuring that unclaimed life insurance benefits do not go unaddressed. Should the bill be enacted, it will necessitate that insurance companies adopt more rigorous procedures to verify the identities of deceased policyholders and their beneficiaries. Insurers must demonstrate good faith efforts to locate the beneficiaries, which is expected to result in a significant reduction in unclaimed benefits that currently escheat to the state as unclaimed property. This legislative change is anticipated to assist families who may be unaware of potential benefits after a loved one’s passing.
Summary
House Bill H973, titled 'An Act relative to unclaimed life insurance benefits,’ proposes amendments to Chapter 175 of the General Laws of Massachusetts to address the handling of unclaimed life insurance proceeds. This bill enforces insurers to conduct regular checks against the Social Security Administration’s Death Master File to identify policyholders who may have passed away, thereby ensuring that beneficiaries receive the benefits owed to them. Insurers would be required to perform at least semi-annual comparisons with the Death Master File to confirm potential matches and take necessary actions to reach out to beneficiaries or their estates.
Contention
While proponents of H973 argue it offers vital consumer protections and a necessary update to insurance practices, there are potential concerns about implementation and the operational burden it might impose on insurance companies. Critics may raise issues about the accuracy of the Death Master File and the logistical challenges of ensuring that all deaths are accurately captured within the specified timeframes. Additionally, there may be debates regarding the privacy of policyholders and the complexities involved in locating beneficiaries, particularly in cases where death certificates may not be easily obtainable.