Frequently Asked Questions about LCBA and LCBA
Insurance & Annuity Products
Q: I’ve never heard of LCBA. Who are they?
A: LCBA stands for the Loyal Christian Benefit Association. LCBA
is a not-for-profit fraternal benefit society founded in 1890 in Titusville, PA.
It’s operations moved to Erie shortly thereafter, and today LCBA is located on
upper Peach Street in Erie. LCBA has been providing final expense
insurance for Christians since our beginning, and has focused on providing
pre-arrangement funding products since 1995. It operates in 35 states and
the District of Columbia.
Q: How safe are they?
A: LCBA, like all insurance providers in PA, is regulated by the PA
Department of Insurance. In addition, we are subject to oversight and
regulation by the 35 states we operate in. We currently have nearly $200
Million in assets under management.
Q: Do I have to be in great health to qualify
A: No. We realize that most people applying for Pre-Arrangement
life insurance are going to have some health issues. As long as the person
is not terminally ill, they will most likely qualify for insurance. In the
event they don’t qualify for life insurance, LCBA has an annuity plan that
everyone qualifies for.
Q: What’s the rate of return on LCBA Plans?
A: The death benefit on our life insurance and annuity plans grow at a
competitive rate. We pay growth to the date of death. Please give us a
call or speak to your funeral director for the current growth rate on LCBA
Q: Do I have to assign the policy to the funeral home?
A: No. However, in order to qualify for Medicaid nursing home
benefits, the policy needs to be irrevocably assigned to someone other than the
Q: Can I change my mind on what funeral home I use?
A: Yes. Upon receiving written request from the owner of the
insurance or annuity certificate or their P.O.A. or Guardian, LCBA will make
arrangements to transfer ownership and beneficiary to an alternate funeral home.
Q: Who has to pay the taxes on the policy?
A: All Life Insurance and Annuity Plans grow on a tax deferred basis –
no 1099 is generated on the growth each year. At the time of death, life
insurance plans pass to the beneficiary income tax free. Annuities do
generate a 1099 to the beneficiary however, since all of the money received as
payment for funeral services is considered income, it does not create any
additional tax burden to the funeral home.
Q: What if there is more money in the policy than the cost of
the funeral services?
A: LCBA is required to pay out the death benefit to the named
beneficiary – and for pre-arrangement funding that is normally the funeral home.
Many funeral homes work under the philosophy that the funds are in fact the
property of the insured or annuitant, so if there is an excess of funds, the
excess will be returned to the estate of the deceased or to the family, however
this varies from state to state. In Ohio if the funeral is guaranteed, the
funeral home is entitled to keep all of the funds from the death claim.
Q: What if the cost of the funeral services requested exceeds
the death benefit?
A: It depends upon the funeral planning agreement between the funeral
home and the person making the arrangements. If the funeral home agrees to
guarantee some or all of the goods and services in exchange for the payment up
front, the family is not obligated to come up with any more money. Most
funeral directors are no longer able to guarantee the goods and services they do
not have direct control over (like obituaries in the newspaper and grave opening
and closings at the cemetery), so there may be additional costs at the time of
the funeral even though the funeral was pre-funded. It’s best to discuss
how these agreements work with your funeral home before you enter into one.
Q: After I die, can anyone change my funeral arrangements?
A: That varies from state to state. Your funeral director should
be able to answer that concern. In Pennsylvania and Ohio, the person
responsible for the disposition of the body determines what arrangements are
actually performed, regardless of what arrangements were made in advance.
Q: What happens if I stop making payments on my “multi-pay”
life insurance policy? (A policy that is purchased on the “installment
A: The policy will revert to a reduced-paid-up status based on the cash
value that has accumulated within the policy. Generally this
“reduced-paid-up” amount is significantly smaller than the original face amount
of the policy. Policies that have reverted to reduced-paid-up status can
be re-activated by paying the back premiums due and answering some health
Q: What happens if I stop making payments on my Pre-Need
A: The policy will grow in value at a slower rate. It will
continue to earn interest, but since no additional contributions are made, the
growth is significantly slower and may never reach the balance needed to provide
for the funeral that has been planned.
Q: Why don’t I get a 1099 form on my life insurance policies?
A: Life insurance cash values grow on a tax deferred basis in most
modern policies. Today most insurance policies (including LCBA Pre-need
policies) invest dividends generated by the policy each year in small amounts of
additional insurance coverage called “paid up additions” that provide additional
insurance benefits and grow on a tax deferred basis. Death Benefit
proceeds are also received income tax free to the beneficiary.
Q: Why don’t I get a 1099 on my Annuities?
A: Like life insurance, annuities grow on a tax deferred basis.
Pre-Need annuities used to fund funeral pre-arrangements will generate a 1099 to
the beneficiary at the death of the annuitant, however since all of the income
to the funeral home is considered taxable income, it’s not a concern.
Q: What happens if I change my mind and want my money back from
my funeral pre-arrangement?
A: It depends upon when that request is made, and whether the policy
the money was placed in was irrevocably assigned or not.
- If the request is made with in the first 20 days after the policy is
issued, LCBA will return the money to the original owner of the policy under
the “free look” provision, typically in care of the funeral home.
- If the request is made after the initial “free look” period and the LCBA
policy is irrevocably assigned, the policy cannot be surrendered. If the
request is being made to come into compliance with State Medicaid
Regulations because it was originally overfunded, we will release the excess
amount upon written approval from the owner and the funeral home to which
the policy has been irrevocably assigned.
Q: Can I move my insurance or annuity policy to a different
A: Yes. The original owner of an LCBA policy can name a successor
assignee/owner on LCBA insurance and annuity policies that have been irrevocably