Our client purchased life insurance coverage for her and her husband in the amount of $140,000 in April 2009. The life insurance was provided through her employer. In 2012, she became disabled and stopped working. The life insurance policy provided, “After you become disabled, your life insurance continues and your employer pays the premiums.” Even though our client became disabled in 2012, her employer failed to pay the life insurance premiums to the insurer and requested that she complete an application for portable coverage. She applied for portable coverage for her and her spouse in April 2012. The insurance company approved her portability application and issued the policy.
Our client’s husband died in 2013. As the decedent’s surviving spouse and the primary beneficiary on the policy, our client filed a death claim for benefits. The insurance company denied her claim. In its denial letter, the insurer stated that she made a material misrepresentation on the Portability Application and, therefore, was not eligible for portability coverage. The insurance company automatically applied the premium our client paid for her spouse’s portable coverage to retroactively purchase conversion coverage. Under the conversion coverage, the benefits were only $150.00.
Since the policy was controlled by ERISA, our ERISA lawyer who worked on the case filed an administrative appeal. The insurer reviewed the appeal and overturned the denial of benefits. Our client was then paid $145,000 – the total amount of her claim under the original coverage.