Arkansas lawsuit: Globe Life canceled burial policies rather than pay claims

A lawsuit filed in an Arkansas federal court last week alleges that Globe Life routinely canceled small life insurance policies when confronted with claims.

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.

According to the plaintiff, Debra Jennings, Globe Life asked vague health questions prior to approving these burial policies. Filed in the Eastern District for the District of Arkansas, the lawsuit seeks class-action status.

Once a claim is filed, Globe Life performs an “exhaustive review” of the claimant’s medical file, the lawsuit alleged, looking for any pretext to deny the claim.

“Globe Life has a uniform practice of refusing to pay on life insurance policies based on non-disclosure of health conditions in an application even when the health condition bears no causal relationship to the policy owner's death,” the lawsuit stated. “This practice is illegal in Arkansas and has been since 2011.”

A Globe Life spokesperson did not respond to a message seeking comment. The insurer is being investigated by the Department of Justice and the Securities and Exchange Commission on various alleged claims and faces additional lawsuits on a variety of allegations.

New life policy purchased

Donna M. Hartley, of Harrisburg, Ark., purchased a life insurance policy from Globe Life on Oct. 31, 2023, the lawsuit said. Jennings, her daughter, is the beneficiary.

Hartley, then 80 years old, initially called Globe Life to inquire about a life insurance policy that she already owned. She was told that under her existing term policy, her benefits would terminate when she turned 90, the lawsuit said.

A Globe Life salesperson told Hartley that she would have to apply for a whole life policy to continue coverage. The salesperson quoted a $73.10 monthly cost on a $5,000 whole life policy and a $144.59 monthly cost on a $10,000 whole life policy.

“The Globe Life salesperson provided no other meaningful information about the whole life policy other than its cost and death benefit amount,” the lawsuit stated. “The salesperson did not tell Ms. Hartley that by replacing her current policy, she could lose all coverage and her family would bear the cost of her funeral.”

Hartley settled on another $10,000 policy and the salesperson proceeded to ask her several health questions, including: “Does the Proposed Insured have any chronic illness or condition which requires periodic medical care or may require future surgery?”

Hartley answered “No” to the questions, the lawsuit said, and the Globe Life representative did not inform her that an incorrect answer could cause her coverage to lapse.

Claim denied

Hartley died on Jan. 8, 2025, with the cause of death listed as "cardiogenic shock," the lawsuit said. About a week later, Jennings filed a claim along with proof of death.

“Plaintiff intended to use the $10,000 to pay for her mother's funeral and submitted the funeral bill along with her claim,” the lawsuit said.

Globe Life dove into Hartley’s medical records and informed Jennings that her mother had not disclosed “a history of left bundle-branch block, nonrheumatic mitral (valve) annulus calcification, depression, anxiety, peripheral vascular disease, neuropathy, and hypertension.”

Hartley incorrectly answered the medical questions, the insurer concluded, and Jennings’s claim was denied, the lawsuit noted.

The Little Rock, Ark. law firm Jennings & Earley is the plaintiff’s attorney and is looking for additional class members.

“Burial policies are typically secured by vulnerable, elderly Arkansans,” the lawsuit stated. “When Globe Life and Accident illegally rescinds these policies, the beneficiaries would reasonably believe they lack the necessary means to take on one of the largest insurance companies in the country.”

Prior to a 2011 law passed by the Arkansas General Assembly, a life insurer could rescind a policy based upon a health condition not disclosed in an application if it could prove "in good faith" it would not have provided coverage had it have known about the undisclosed medical condition.

Since April 1, 2011, life insurers may only rescind policies when they prove fraud or a "material" misrepresentation with "a causal relationship" to "the hazard resulting in a loss under the policy or contract,” the lawsuit pointed out.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.