Unclaimed Life Insurance Benefits as per UUPA

Unclaimed Life Insurance Benefits Act

It is well known fact that insurance companies pays billions of money as claims to their clients but still there is percentage of profit that goes unclaimed by the policyholders every year. According to the state unclaimed property laws, the policy holder should report the policies proceed which are not claimed. State unclaimed property laws are usually based on Uniform Unclaimed Property Act (UUPA). This is formed by National Conference of Commissioners on Uniform State Laws in order to bring uniformity in state laws. It maintains that life insurance cannot be unclaimed until it matures or in case there is no claim till the insured reaches the limiting age.

Unclaimed Life Insurance Benefits Act

As per UUPA, it is not a proactive duty of insurer to see that whether an insured has died so as to make the claims processed. However it has been thought that the fact that the insurer should see that insured has died so that he gets claim, comes under insurance regulation rather than unclaimed property law. State legislature needs to start enacting laws that asks the insurance company to carry out database searches with the help of the U.S. Social Security Administration’s Death Master File (DMF). This step is taken for enforceability and consistency. State insurance department and their legislatures are working hand in hand to solve the problem of unclaimed benefits.

The National Conference of Insurance Legislators (NCOIL) in 2011 adopted the Model Unclaimed Life Insurance Benefits Act. This was done in order to address the issue of unclaimed benefits. NCOIL revised this model again in 2014.

There has been an intense working on revising the UPPA with NCOIL’s Model Unclaimed Life Insurance Benefits Act is carried out. The new uniformed laws will allow the policyholder to hold funds in unclaimed insurance policies and annuities. This will be from a period of three years from the death notice and after this period the funds will be escheat to the state. In case the insurance company is not able to confirm the death of policyholder then the rules will not be applicable. The initial draft also includes requirement that the DMF is being used by life insurers or other such comparable database.

The Unclaimed Life Insurance Benefits (A) Working Group of the NAIC Life Insurance and Annuities (A) Committee has stated that a new NAIC model law should be developed for the issue of unclaimed death benefits. The new NAIC model law was adopted by the Life Insurance and Annuities (A) Committee at the NAIC 2014 Fall National Meeting. The committee’s model law was approved by The NAIC Executive (EX) Committee at the NAIC 2015 Spring National Meeting.

The new NAIC model has been started to develop by the Working Group with the help of work of the unclaimed Benefits Model (A) Drafting Subgroup. An initial draft of proposed new NAIC model that addresses the unclaimed benefits was proposed in November 2015 for public comments. All the comments received were then to be reviewed. After going through all the comments and discussions, new revised draft will come into action. The current draft has applicability provision that offers states to make the model’s provisions more prospective.

There are many states that offers website to check the unclaimed property records. Here on this websites one can check the unclaimed property record that their loved ones might have taken.