Doug Ommen, director of the Missouri Department of Insurance, recently ordered Lincoln Memorial Life Insurance Company to reverse previous business transactions to protect the financial security of consumers who have purchased pre-need contracts from National Prearranged Services.
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The order states that Lincoln Memorial Life Insurance Company (Lincoln Memorial) issued
whole life policies to the pre-need trust to cover the lives of those who purchased pre-need
contracts through National Prearranged Services (NPS).
Only a few area people have purchased pre-need funeral contracts, according to local funeral home directors, and they should not be directly affected by the present examination by several state agencies of National Prearranged Services, and its sister company, Lincoln Memorial Life Insurance Co.
"The only people it will affect will be the funeral home," said David McWilliams of McWilliams Funeral Home in Gallatin. "The pre-need contracts are all good. The funeral home has to stand behind its contracts, not the people who have the contracts."
Alan Roberson, owner of Roberson Funeral Home in Pattonsburg, said: "Everything is covered for what is contracted for, nobody has any worries, nobody is going to lose money."
Beginning in June 2000, Lincoln Memorial began replacing whole life insurance policies with term life insurance policies without the authorization of the trustee. The insurance company also made loans to NPS or NPS’s investment advisor secured by the cash value and benefits of one or more of the whole life insurance policies without securing the consent of the pre-need trustee. Lincoln Memorial made such replacements and loans without notifying policyholders.
A pre-need contract is an arrangement which requires current payment of money for future
delivery of funeral or burial services. The pre-need trust receives deposits, administers and
disburses payments received under the contracts. All funds in a pre-need trust must be invested
and reinvested by the trustee.
Director Ommen’s action orders the immediate reversal of the replacement of whole life policies
and any policy loans that were made against the whole life insurance policies.
"Ordering this reversal of policies and loans is an important step in protecting pre-need contracts
purchased by Missouri consumers," Ommen said. "Our department will continue to take every
necessary action to ensure consumers get the services and benefits they’ve been promised."
The Insurance Market Regulation Division further requests that Lincoln Memorial refund all
premiums paid for term life insurance policies in which a term policy was the only type of policy
issued on pre-need contracts. The division also seeks monetary penalties and payment of
investigation costs.
A hearing will occur on May 12, 2008 in order to show cause why the division’s requests should
not be granted against Lincoln Memorial.
The Department of Insurance, Financial Institutions & Professional Registration has announced the creation of a free hotline (1-866-296-8801) to assist Missouri consumers who have purchased pre-need contracts.