Signed into law by Governor Rauner on August 26, 2016, IL HB 4633 creates the Illinois Uniform Unclaimed Life Insurance Benefits Act and amends the state Insurance Code. This bill will become effective on January 1, 2017 and details the requirements and procedures to which insurers must adhere to ensure compliance. This includes identifying deceased insureds and performing outreach to the appropriate beneficiaries when payment is due.
Uniform Unclaimed Life Insurance Benefits Act Requirements
Illinois HB 4633 requires that all insurers must compare all insureds of its in-force policies, annuity contracts, and retained asset accounts in its records against the complete Social Security Death Master File (DMF) on or before December 31, 2017, and against any updates to the DMF at least semi-annually thereafter.
For potential DMF matches, insurers must begin beneficiary location efforts within 120 days after the receipt of a date of death notice. The date of death notice is specified as the date the insurer first receives notice of the date of death of an insured. If the insurer has not been contacted by a beneficiary, the insurer must determine whether benefits are due in accordance with the applicable policy or contract, and if so, must use documented “good faith efforts” to locate the policy holder’s beneficiary or beneficiaries.
In the event that the insurer is able to contact the beneficiary as a result of a thorough search, the insurer must provide claim forms or instructions to the beneficiary to make a claim, including the need to provide an official death certificate.
According to the Uniform Life Insurance Benefits Act, proceeds and benefits from a policy, annuity contract, or retained asset account, plus any applicable accrued interest, first must be payable to the designated beneficiaries or owner. If a beneficiary cannot be found, the proceeds must be reported to the State Treasurer in accordance with the Unclaimed Property Act.
Lastly, the new law will establish a Lost Policy Finder developed by the Illinois Department of Insurance. This tool, available online and in other forms, will assist insureds and beneficiaries in locating outstanding policies. The Department of Insurance will also be required to assist individuals in submitting claims with the respective insurers.
Other States with Unclaimed Life Insurance Benefits Legislation
With the enactment of Illinois HB 4633, 23 states now have passed legislation addressing unclaimed life insurance benefits. At present time, five states have pending legislation that would require DMF matching and proactive beneficiary location measures.
Keane will be sure to provide the latest updates on our Unclaimed Property Blog for additional information regarding this topic and other Unclaimed Property resources. We also encourage you to subscribe to Keane’s Unclaimed Property Compliance Portal to stay up to date on all legislation, along with access to various escheat compliance resources.
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