A state court in Travis County, Texas, has approved a liquidation plan for 2 funeral insurers and a funeral services sales affiliate.
The order affects Memorial Service Life Insurance Company and Lincoln Memorial Life Insurance Company of Texas.
The order also affects National Prearranged Services Inc., Clayton, Mo., an affiliate of the insurers that helped distribute their insurance through funeral homes and other sellers.
The liquidation plan was developed by Donna Garrett, the insurance companies’ special deputy receiver; the Texas Department of Insurance; and the National Organization of Life and Health Insurance Guaranty Associations, Herndon, Va.
The plan calls for state guaranty associations to pay the original insurance policy death benefits for Lincoln Memorial and Memorial Service policyholders.
Representatives of the affected companies have not responded to telephone calls seeking comments about the companies’ dealings with regulators.
In the past, insurance regulators have estimated that more than 100,000 consumers may have funeral insurance policies written by Lincoln Memorial and Memorial Service and purchased through National Prearranged Services.
Regulators placed the 3 affiliated companies in receivership in May, after questions were raised about whether unauthorized transactions had led to the replacement of permanent funeral insurance policies with term life policies.
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