A common issue with life insurance benefits is a deceptively simple one: what if the beneficiary doesn’t know that they are named in the life insurance policy? In such cases, life insurers are typically obligated to advise the unknowing beneficiary of the insured’s death and their entitlement to death benefits under the insurance policy. But since the insurer doesn’t have to pay out death benefits if the beneficiary cannot be found, insurers have an incentive to shirk this responsibility.
That was the issue in a January 28, 2019 announcement by the New York Department of Financial Services that it had entered into a consent order with MetLife Insurance Company, under which MetLife agreed to pay over $200 million in fines and restitution. The New York regulator found MetLife had failed to adequately locate insureds and beneficiaries who would have been entitled to benefits under MetLife life insurance policies or pensions. The regulator found violations going back to 1992.
In addition to paying a fine to the New York state regulator, MetLife agreed to retroactively pay benefits to policyholders it failed to properly locate. Further, the consent order requires MetLife to utilize the Social Security Death Master File to identify life insurance an annuity contract holders who have died but whose beneficiaries may be unaware they are entitled to benefits.