EMPLOYMENT BASED LIFE INSURANCE (ERISA)
Large companies often provide employees with group life insurance coverage as a benefit of employment. This coverage is provided by the employer and paid for by the employer and oftentimes is provided by an outside insurance company. Many of these employers also provide the employee the option to purchase additional group life insurance coverage, referred to as optional, voluntary, or supplemental life insurance, for which the employee pays the premium. If the employee subsequently passes away, the surviving family members who are named as beneficiaries of the life insurance then seek payment from the life insurance company who issued the policy.
If the insurance company denies payment of the benefit owed under the employer-provided life insurance, the beneficiary is generally required to follow certain procedures to challenge this denial. The Employment Retirement Income Security Act of 1974, known as ERISA, 29 U.S.C. §§ 1001-1461, is a federal statute that governs insurance plans provided to employees as part of a benefits package. Under ERISA, challenges to such life insurance denials must be pursued according to the specific procedural requirements of this law.
Denials of life insurance coverage under employer-provided life insurance typically arise when the employee stops working due to a serious illness (such as cancer) that requires extensive treatment and makes the employee too ill to work. The employee eventually is required to go on long-term disability leave. She may continue to receive disability payments under the employer’s disability policy and therefore may assume that the life insurance coverage continues as well. Depending on the terms of the insurance plan, however, the employee’s coverage under the life insurance policy may end at a certain point. Frequently coverage ends one year after the employee first went out on disability, at which point the employee may no longer be considered an employee. The employer and insurance company cannot, however, simply cut off coverage. They must provide notice that the policy coverage will end and explain the employee’s options. For example, many policies require that the employee have the opportunity to convert the group policy to an individual policy (for which the former employee will be required to pay monthly premiums). Certain policies also offer the possibility of continuing coverage under the group policy beyond the standard cut-off date if certain conditions are met. In such circumstances, the employee may be able to apply for a waiver of the monthly premiums.
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 provide the proper opportunity to convert or extend the life insurance coverage. The life insurance attorneys at Trief & Olk are available to answer your questions and represent you if life insurance has been denied.