Yikes -- a Houston-based "end of life needs" insurance company will reimburse California beneficiaries $25 million, California State Controller John Chiang announced Monday.
Chiang accused Forethought Financial Group of not paying death benefit, saying, "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."
According to Forethought's website, the 27-year-old company offers "enduring financial solutions for those seeking to plan for their own financial future, or to reduce the burden of loss for loved ones."
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Chiang also decried what he called an industrywide practice of companies drawing down "the policies' cash reserves in order to continue collecting premium payments" from folks who'd already kicked the bucket.
In the settlement agreement with Chiang's office, Forethought agreed to "restore the full value of impacted accounts" and "cooperate with the Controller's efforts to reunite millions of dollars in death benefits and matured annuities and other policies with their owners or, in many cases, the owners' heirs," among other things.
We hope no Texas clients have been screwed by Forethought, especially the ones who are still alive! We left a message with Forethought's marketing director and will update accordingly.
UPDATE: We heard from a Forethought spokesperson, who provided us with the company's statement: "Starting in 2011, Forethought proactively and voluntarily initiated an exhaustive internal review of its policyholders....Based on this review, we reached out to the state of California to facilitate payment for those cases where a customer had passed away and no claim had been submitted to Forethought. The amounts associated with this review in California total 8,000 policyholders out of our 1.1 million in force policies....There is no fine or penalty associated with this resolution. Forethought will pay any beneficiary amounts identified through this process, or [transfer] remaining unclaimed amounts to the state."