California enacted a death-benefit law this week that will place new requirements on life insurance companies. In response to complaints that insurers routinely failed to contact or pay death settlements after policyholders died, the government has moved to increase protections for beneficiaries.
Over the past year, California state officials have looked into the activity of life insurance companies after discovering that many were failing to alert beneficiaries of settlement payouts owed—and in some cases, even choosing not to attempt to find them.
Instead, the companies were storing death benefits in so-called retained asset accounts (RAAs) that accrued interest over time.
Companies in California were required to either pay beneficiaries within a three-year period or turn the funds over to the states comptrollers office. H
