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According to the IRS, no, he should be receiving a W-2 ("despite being a 'volunteer'), not a 1099-MISC. However, issuing a 1099-MISC has been a common practice for many volunteer companies for many years, and even though the IRS has of late issued some instructions on how this should be handled, I imagine it will take years before all organizations change over.
As for the repayment of the $24,000, this sounds like a way to fund the $100,000 life insurance, but we would have to understand a lot more about the books in order to say more.
Please see "FEDERAL TAX EXEMPTION FOR VOLUNTEER RESPONDERS MADE PERMANENT" and "Issues for Firefighters" for background. I would encourage you also to contact the National Volunteer Fire Council for the latest information.
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