DFS Fines Globe Life of NY and Orders it to Pay $7.3M in Death Benefit Restitution to Beneficiaries
On Jan. 28, 2019, the DFS announced that under a consent order, Globe Life must pay a $439,000 fine and restitution to beneficiaries of the holders of the life insurance policies, which have a face amount of approximately $7,330,000 due to violations of NY Insurance Law.
The consent order stems from an investigation conducted by DFS of Globe Life’s contestable claims practices from 2006 to 2016. The DFS investigation found that Globe Life:
Routinely requested medical records from a deceased policyholder’s beneficiaries if the death occurred within the two-year contestable period, even where it had no basis to suspect a material misrepresentation
If medical records were not produced, Globe Life unilaterally closed the claim and notified the beneficiaries that the policy would not be paid because of the failure to provide medical records as requested
Globe Life also unilaterally rescinded claims when it received medical records and concluded that the deceased had made a material misrepresentation
The Globe policies were marketed to low- and middle-income New Yorkers for funeral, burial and other final expenses. DFS will also select an independent third-party administrator to oversee the restitution process to ensure that all eligible beneficiaries receive the payments to which they are entitled.