As you can read in this recent article from the Insurance NewsNet a plaintiff in Arkansas is alleging that Globe Life “routinely canceled small life insurance policies when confronted with claims”.  The article goes on to say that “The small policies, generally $5,000 to $20,000, are sometimes known as “burial” policies and commonly cover funeral costs, medical and other debts. They are popular in the South and Midwest, where funerals are a strong cultural tradition.”

In more information supplied from an Arkansas law firm the case was described in this manner:

“A class action lawsuit was filed against Globe Life in federal court in the Eastern District of Arkansas alleging that Globe Life routinely cancels or rescinds small life insurance policies—typically ranging from $5,000 to $20,000—when beneficiaries file claims. These “burial policies” are often purchased to cover funeral expenses, medical bills, and other final costs.

According to the complaint, Globe Life:

• Asks vague or overly broad health questions when selling policies.
• Later conducts exhaustive reviews of the insured’s medical history after death.
• Uses minor or unrelated health issues as a pretext to deny claims.

 

The compliant alleges these practices violate Arkansas law, which since 2011 has prohibited insurers from rescinding policies unless they can prove fraud or a material misrepresentation directly related to the cause of death.”

Funeral Director Daily take: From my perspective I’m under the assumption that policies that are known as “Burial” policies or “Final Expense” policies are not sold under the purview of what most funeral homes and funeral directors would label “PreNeed” policies.  That, however, does not mean that those types of policies are not sold by their companies for the purpose of paying for future Death Care expenses by general agents outside of the business of Death Care.

It also doesn’t meant that consumers don’t buy those policies with the idea that they will have their family use at least some of the insurance proceeds for Death Care expenses.

There are some big differences though between what I would suggest as proper PreNeed policies and some types of policies offered by companies as “Burial” or “Final Expense” policies.

In a nutshell I would look for a PreNeed policy to be of the “whole life” variety where it is not canceled because premiums got too expensive as a policyholder’s age increases.  Preferably for PreNeed policies it is my opinion that “Single Premium” whole life policies are best  —  there is no possibility of one of these ypes of policies lapsing for lack of premium payments.

Secondly, I would look to align with a company where once the policy was accepted under the terms of the contract the reason or cause of death would make no difference as to the claim payment.

Funeral Director Daily will watch this lawsuit play out and inform our readers what happens.  In the meantime I think it is imperative that consumers get life-time protection and assurances from the PreNeed policies sold through funeral homes.  It might be a good time to check on the policies and provider that your funeral home teams up with.

Related Article —  Arkansas lawsuit filed over canceled “Burial” life insurance policies sold by Globe Life.   Cision PR Newswire

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