Preneed: A Pandora's Box of Problems
Give the State Board credit for attempting to clarify how insurance assignments must be handled for compliance with Missouri laws.
For several months, the State Board has sought clarifications from MO HealthNet regarding spend-downs. On May 12th, the Board emailed to the industry new MO HealthNet guidelines for insurance assignments. One day later, the legislature…
A “Spend Down” is the transaction where a person seeking public assistance transfers money or insurance to a funeral home to avoid having the “asset” count as a resource. It is a commonly held perception that the Spend Down accounts for many preneed contract purchases. But should all Spend Downs trigger the state preneed law…
The Illinois Division of Insurance made the right call: the IFDA master trust does not have an insurable interest in the lives of the members who participate in the trust.
A preneed trust is intended to fund the liability that arises when the preneed beneficiary dies and a funeral must be provided. Accordingly, it…
As new allegations surface about the Merrill Lynch broker associated with the IFDA master trust, some may appropriately ask why a preneed trust would ever invest in an insurance product. There was a time when the twain shall never meet. That all changed in January 1988, and specifically when the IRS and Treasury decided to…
In reporting on Forethought’s cut in growth payments last month, the Funeral Service Insider made a curious statement about the taxability. Referencing one of Forethought’s products, the article stated that a funeral home would have received the product’s growth tax free, and now would have to recognize the bonus as income. The article suggests…
It has to be bad when your main source tells you its time for the Methadone clinic. With the worst financial crisis in our lifetime, and spiraling costs, what funeral director isn’t already battling a case of the sweats and shakes when reviewing his/her preneed program? And now you’re being told to go cold turkey on …
Part of the bad rap against preneed stems from the salesman who is prepared to say anything to close the sale. While, reputable companies build safeguards into their programs to check this behavior, there will be individuals who are prepared to bend the rules. Who should be held accountable when the agent intentionally violates the…
While the Wall Street bail out plan has many flaws, one of its proposals has wide-based support: the concept of increasing the limit on insured deposits to $250,000. According to the New York Times, the driving force behind this proposal wasn’t the mega-banks, but rather our local banks.
The Independent Community Bankers of America represents approximately 8,000 local…
During the long and tedious Chapter 436 hearings, some Missouri funeral directors joined consumer advocates in using the NPS failure as reason for recommending that legislators impose 100% trusting on the preneed transaction. Those funeral directors generally advocated the use of insurance or joint accounts as safer methods of preneed funding. During regulatory meetings, comments were also made about how…
Concurrent with the hearing held on her Liquidation Plan, the Special Deputy Receiver posted a financial report to the Lincoln Memorial Life/NPS website. As with most financial statements, explanatory notes at the end of the report provide some insights to the failed NPS empire. While prior documents have disclosed that the companies have a deficient of…