Chattanooga, TNThe insurance company Unum was recently subpoenaed by New York's attorney general, Andrew Cuomo, in connection to allegations of fraud over how insurers pay benefits on life insurance after the policy holder passes way.
Cuomo and his office are investigating a number of insurance companies over the practice of retaining funds from life insurance beneficiaries in privately controlled accounts rather than paying out a lump sum, according to the Associated Press. Cuomo, who is a candidate for New York governor, said that such accounts can be risky because they are not protected by the federal government.
Unum spokesman Jim Sabourin told the Chattanooga Times Free Press that his company disagrees with the charges.
"That's a complete mischaracterization," he said. "The media reports we've seen we believe are misleading, and we disagree with the way these accounts have been portrayed."
The National Association of Insurance Commissioners said in a statement that the accounts in question were created in response to consumer demand.
"With proper disclosure, consumers have generally been happy with this flexibility," said Jane Cline, according to the news source. "Traditionally, consumers earn interest under these accounts, allowing their benefit to grow without the need to make impulsive decisions about how to manage the benefit."
The group also noted that such accounts are backed by state governments rather than the Federal Deposit Insurance Corp.
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