States Suspect Life Insurers Are Screwing the Dead Some ignoring information showing policy holders are dead By Kevin Spak, Newser Staff Posted Apr 28, 2011 1:35 PM CDT 11 comments Comments Insurance companies may not have been very conscientious about paying life insurance benefits. (Shutterstock) (Newser) – Dozens of states are investigating the possibility that major insurance companies have been less than conscientious about paying out life insurance benefits for their dead customers. The investigations began when 35 states signed up for an auditing firm’s offer to look for unclaimed life insurance benefits that could be seized by states as abandoned property. But investigators discovered that insurers appeared to be ignoring the deaths of some clients—even as they used those same sources to justify cutting off annuity payments to others, the Wall Street Journal explains. Insurers aren’t legally required to check and see if policyholders are alive, but Florida and California are questioning the legality of insurers who discover a customer’s death and don’t act on the information. And stirring the pot is yielding results: John Hancock last week became the first insurer to settle with 23 states, setting up a system to monitor policies.