Press Release
January 28, 2019


Globe Life Must Also Pay $439,000 Fine After DFS Examination and Investigation of Company’s Contestable Claims Practices

Financial Services Superintendent Maria T. Vullo today announced that the New York State Department of Financial Services is taking action against Globe Life Insurance Company of New York (“Globe Life”) after the company improperly denied claims and rescinded life insurance policies for 439 deceased policyholders and engaged in unfair claims settlement practices in violation of New York Insurance Law.  Under a consent order announced today, Globe Life must pay a $439,000 fine as well as pay restitution to beneficiaries of the holders of the life insurance policies, which have a face amount of approximately $7,330,000, and 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.

“Globe Life violated the trust of its policyholders who wanted to make sure that their loved ones were not burdened by expenses related to their funeral and other end-of-life issues,” Superintendent Vullo said. “With this fine and restitution, DFS is holding the company accountable for upholding its contractual obligations and restoring what is owed to the policyholders’ beneficiaries.”

The consent order announced today stems from an investigation conducted by DFS of Globe Life’s contestable claims practices from 2006 to 2016.  DFS’s investigation found that Globe Life engaged in the following violations of New York Insurance Law:

  • Improperly closing claims when policyholders died within the two-year contestable period without proving in a court action a misrepresentation by the policyholder on the application for insurance as required by Insurance Law;
  • Engaging in unfair claims settlement practices by improperly misrepresenting facts and policy provisions relating to coverage and not attempting in good faith to effectuate prompt, fair, and equitable settlements of submitted claims in which liability had become reasonably clear; and
  • Failing to refer in writing to a specific policy provision, condition, or exclusion in a policy that was the basis for denying a claim, or by not providing a specific reason for disclaiming coverage.

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, under which insurers may investigate and contest claims for material misrepresentations, 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.

Under the consent order announced today, DFS will select an independent third-party administrator to review claims designated for rescission and administer the restitution process. This will include identifying and locating beneficiaries of contestable claims that were unlawfully closed without payment.  The third-party administrator will establish an email address, a website and a toll-free telephone number for affected consumers.  Information regarding the third-party administrator will be posted to the DFS website at upon selection.  Globe Life, which is headquartered in Liverpool, N.Y., will be responsible for paying for the costs of the administrator.

The consent order can be found here.

The previous guidance on unfair claim settlement practices during the contestability period can be found here.