WASHINGTON, D.C. — The National Association of State Treasurers (NAST) and the National Association of Unclaimed Property Administrators (NAUPA) have adopted a resolution urging states to fortify consumer protections in unclaimed-property laws governing life-insurance death benefits. The resolution’s objective is straightforward: accelerate identification of payable benefits, reduce red tape for families, and provide clear, uniform expectations for insurers and administrators.
Why this matters (plain language)
Life-insurance proceeds are intended to reach beneficiaries at a difficult time. In practice, delays can occur when there is no timely notice of death, records are incomplete, or insurers lack consistent triggers to start the unclaimed-property clock. The NAST/NAUPA resolution addresses these gaps by defining when dormancy begins, clarifying the limited role of “limiting age,” encouraging proactive data matching, and ensuring documentation requirements don’t become unnecessary barriers.
Core principles in the resolution
1) Dormancy begins on the date of death
- What it means: The clock for unclaimed-property dormancy should start when the insured dies—not when a policy matures or reaches some contractual endpoint.
- Why it helps: Tying dormancy to the actual date of death avoids prolonged limbo and ensures beneficiaries are not disadvantaged by delayed notice.
2) “Limiting age” is a fallback, not the default
- What it means: The actuarial “limiting age” should be used only when the insurer cannot confirm death.
- Why it helps: This prevents premature escheatment in ambiguous cases while preserving a backstop when death cannot be verified.
3) No death certificate prerequisite to presume unclaimed
- What it means: Requiring a death certificate just to determine that a policy is unclaimed is discouraged.
- Why it helps: Removing this hurdle reduces administrative friction for families and allows the unclaimed-property process to begin based on reliable indicators of death (e.g., DMF matches), with documentation verified during claims.
4) Mandatory, periodic DMF matching
- What it means: Insurers should routinely compare policyholder records with the Social Security Death Master File (DMF) or equivalent sources.
- Scope suggested by the resolution:
- An initial sweep covering all in-force and recently lapsed policies, and
- Semiannual updates for active blocks of business.
- Why it helps: Proactive matching surfaces deaths that may otherwise go undetected, speeding outreach and payment.
Broader policy direction
NAST and NAUPA urge states to:
- Align statutes with the resolution’s protections; and
- Avoid adopting versions of the 2016 Revised Uniform Unclaimed Property Act (RUUPA) unless those provisions meet or exceed the resolution’s safeguards for heirs and beneficiaries.
Practical implications for each stakeholder
For state administrators
- Accuracy & speed: Clear triggers (date-of-death dormancy) and DMF expectations improve identification and routing of benefits.
- Consistency: Aligning with the resolution supports uniform administration across jurisdictions.
For policyholders & beneficiaries
- Timeliness: Benefits are located sooner when dormancy begins at death and insurers run regular DMF checks.
- Fewer obstacles: Not forcing a death certificate solely to start the unclaimed-property clock reduces unnecessary delays.
For insurers
- Operational clarity: Defined dormancy triggers and DMF cadence simplify compliance planning.
- Transparency: Clearer escheatment procedures lower dispute risk and improve beneficiary outcomes.
Implementation guide for states (high-level)
- Statutory alignment
- Amend definitions so dormancy for life-insurance death benefits begins at date of death.
- Clarify that limiting age is used only where death cannot be confirmed.
- Specify that a death certificate is not required to presume unclaimed; verification can occur during claims.
- Administrative rules & guidance
- Establish DMF matching cadence (initial sweep + semiannual updates).
- Provide model outreach language for insurers when a match occurs.
- Define data-handling standards for privacy/security when processing death matches.
- Oversight & reporting
- Encourage recordkeeping on DMF checks and owner-contact attempts.
- Track time-to-escheat and time-to-claim metrics to monitor consumer outcomes.
Note: The resolution sets policy direction; each state will tailor statute and rule language to local law.
Example administrative workflow (illustrative)
- Data hygiene: Insurer updates policyholder files; flags recently lapsed policies.
- DMF sweep: Run initial/biannual DMF comparisons; generate “potential death” match list.
- Outreach: Initiate beneficiary contact based on match; document outcomes.
- Dormancy clock: If death confirmed and no beneficiary contact/action, start dormancy at date of death.
- Escheatment: After dormancy + due diligence, report/remit to the state per statute.
- Claim handling: State verifies claimant identity/relationship and issues payment.
Frequently asked (at a glance)
Does this change who gets paid?
- No. Beneficiaries designated by the policy still receive proceeds; the resolution concerns timelines and procedures, not entitlement rules.
Will families still need documents?
- Yes—during claims. The resolution discourages using a death certificate just to start the unclaimed-property process; documentation is still reviewed before payment.
How often must insurers run DMF checks?
- The resolution urges an initial search across all in-force/recently lapsed policies and semiannual updates for active policies.
What if death cannot be confirmed?
- States may rely on “limiting age” as a secondary measure until confirmation is possible, as the resolution suggests.
Alignment with consumer-protection goals
The resolution advances three goals central to unclaimed-property programs:
- Find benefits earlier (date-of-death dormancy + DMF matching),
- Lower barriers for rightful recipients (no pre-escheat death-certificate prerequisite), and
- Create uniform expectations that reduce confusion, disputes, and delays.
