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The DEATH MASTER FILE is an ominous sounding sucker to say the least, but it’s really just the running tally of the Social Security administration’s list of deceased recipients of social security benefits. No problem, right?

And truly there wouldn’t be if life insurance companies used it to its’ full extent. Life insurance and annuity companies use a program to cross reference with the DMf so that when a person dies they can quit paying annuity payments or in the case of a survivor plan, switch the payments to the annuity survivor. Innocent enough. And considering the amount of life insurance claims that never get filed because survivors don’t even know the insurance exists, what a great way for life insurance companies to proactively pay claims. When a family doesn’t even know the insurance exists, they could get a call from the life insurance company asking them to file a claim. How cool is that?

No really, are you thinking that’s what happens? What’s really been happening is that some of the biggest names in life insurance industry, the most recent being Met Life, are using the DML for the annuity side but are intentionally bilking life insurance beneficiaries by ignoring the unpaid life insurance claims that could just as easily be unearthed.

Unknown life insurance policies are a huge problem. People buy life insurance and don’t tell the beneficiaries about it, or a third party, or show someone in the family where the policies are kept. About a quarter of all life insurance policies are lost over the years. When that happens and there is a death all the searching through drawers and files in the world isn’t going to help. If you can’t find out who the insurance is with you can’t file a claim. And when you consider that life insurance companies could partner with our own social security administration to put an end to unfiled life insurance claims, but they don’t, well, it sounds like they may just be using a several billion dollar loophole to their advantage.

With names like Met Life, John Hancock, Prudential and AIG raising a fuss with state insurance commissions because of their use of the DML to find unpaid life insurance, the tables are now being turned back on the insurance companies. Class action lawsuits are piling up and life insurance companies are settling at record levels. The good news is they have the money to pay it. The bad news is that in so many cases the beneficiaries are dead also. The people that the insured wanted to protect never got because the insurance companies want to hide behind the, “if you don’t file a claim we can’t pay” charade.

Since writing this several years ago I am happy to say that life insurance companies have squared themselves away and now use the master list to keep watch for life insurance claims that would have, in the past, not been filed. It was a real blemish on the industry but the companies that were at fault are better now for taking responsibility and making things right.

Even with that cleaned up, the list below is simply good common sense for agents doing customer service and for owners of life insurance policies.
1. Don’t keep it a secret. Let the beneficiary know it exists, who it’s with and who to call if you die.
2. Have someone they should call if you die. I might suggest that this should be your life insurance agent if you have one that stays in touch.
3. Let more than one family member know where the life insurance policies are kept.
4. If you’re a beneficiary, find out how the premiums are paid and when. If the insured is in an accident and a coma you want to make sure premiums continue to be paid. If the insured has Alzheimers or some other mentally debilitating disease, make sure you can keep insurance in force.

Bottom line. It’s a shame when huge successful companies don’t treat people right but it’s all to common, so take care of yourself and your family just by communicating. If you have any questions please call or email me directly. My name is Ed Hinerman. Let’s talk.