Jan. 16, 2012—New York State Department of Financial Services launched an investigation in July 2011 into the state’s life-insurance companies’ use of Social Security Administration’s Death Master File. Some life insurers had used the system to verify policyholders’ identities to cease payment of annuities, but hadn’t used the system to pay out death benefits to policyholders’ beneficiaries.
During the investigation, the state required New York-based insurance companies to use the system to verify a policyholder’s death and pay out benefits accordingly.
New York Gov. Andrew Cuomo’s administration announced Dec 5, 2011, that insurance companies had paid out an additional $52.6 million to policyholders’ beneficiaries as a result of the investigation. The state also required insurance companies to pay interest on late benefit payouts.
David Neustadt, who is a spokesperson for Department of Financial Services, said that as of January 2012, the amount of benefit payouts increased to $78 million.
Be sure to check out Consumers Digest’s in-depth report about life-insurance policies in the coming March/April 2012 issue.