Protecting Your Employer-Provided Life Insurance
Many employers offer their employees group life insurance coverage for which the employer pays the premiums. The benefit offered (the amount of life insurance the employee’s family would receive if she passes away) may be for a fixed dollar amount or a multiple of the employee’s salary. Employers may also offer the employee the option of adding supplemental life insurance coverage for which the employee pays the premiums. Regardless of which type of coverage is obtained, the employer is the party that obtains the policy and deals with the life insurance provider. Because the employee is not purchasing the life insurance directly, it is important for the employee and the employee’s family to understand the coverage provided through the employer, so that if the employee passes away, the beneficiaries will receive the insurance payments to which they are entitled.
At Trief & Olk, we see many cases where the employee or former employee passes away and the insurance company has improperly denied payment or the claim. Typically, these cases come up when the employer uses a third-party intermediary to process the paperwork related to the life insurance: signing up new employees, processing change in beneficiary forms, and handling payment requests if an employee passes away. Unfortunately, with a third party added to the mix, it becomes more likely that mistakes will occur and the claim denied: often, paperwork is lost, key information about the employee provided to the life insurance company is incorrect or incomplete, and it is unclear who is accountable to the employee and the employee’s family. Over the past few years, Trief & Olk has resolved similar denied claims for families without having to file suit, by carefully reviewing the paperwork sent to the employee or employee’s family and finding that the employer and/or life insurance company had not handled the life insurance coverage or payment properly.
To avoid these problems, it is advisable for the employee and family to understand the relevant details regarding the life insurance coverage well before any problem arises. When the employee first obtains coverage, the following steps are recommended:
- Obtain a copy of any paperwork documenting the existence of the employer-provided life insurance, the amount of coverage, and the designated beneficiaries;
- Obtain information regarding what steps beneficiaries must take in order to claim the benefit;
- Obtain a copy of the documents describing the terms of the policy and/or the policy itself or become familiar with the basic information available through the employer’s website or employee benefits portal; and
- Notify the next of kin (spouse, parent, child) that this coverage exists and where the documentation is stored, so they know to follow-up with the employer if the need arises.
If the employee becomes ill and is forced to leave his job, in many cases there is an option to continue the employer-provided life insurance coverage (and other employee benefits) after the employment ends. The employee and family are often focused on dealing with the illness, not matters such as life insurance; however, it is important to find out from the employer (preferably before the employment terminates) whether any coverage continues after the employee leaves the company, and if so, what steps must be taken to ensure the coverage continues. “Don’t Lose Life Insurance Coverage When You Need It Most – When You Are Gravely Ill”
If you recently lost a loved one who had employer-provided life insurance for which payment was denied, you may have a claim if the employer and/or insurer did not properly process the claim. The life insurance attorneys at Trief & Olk are available to answer your questions and represent you if life insurance claim has been denied. Feel free to consult our website for examples of the many successes we have had when life insurance companies denied payment or call us directly to discuss how we may help you.