California officials have reached a $25 million settlement with a company that sells end-of-life policies through funeral planners, state Controller John Chiang announced.
The settlement with Forethought Group Inc., a Texas-based company that, according to its website, offers planning for retirement and end-of-life needs, comes after a 2008 audit found what Chiang termed an “industry-wide practice” of companies failing to pay death benefits even though the companies had access to federal records indicating policyholders had died.
“Those who purchased policies from Forethought wanted peace of mind that their spouses, children and loved ones would not be burdened with the expenses and inconvenience associated with paying and planning for a funeral,” Chiang said in a statement. “It’s a shameful betrayal of trust when this insurance company -either through wanton greed or careless neglect – did not honor their obligation to pay,” the statement said.
As part of the settlement, Forethought Group will pay nearly $25 million to California beneficiaries, Chiang said. The company has also agreed to adopt reforms to make sure benefits are paid promptly in the future.
The state had previously reached similar agreements with three other insurance companies, Chiang said.
A request for comment from Forethought Group on Monday evening was not immediately returned.