Our clients were designated beneficiaries on their mother’s life insurance policy. Their mother had a group life insurance policy through her employer. However, after their mother’s death the insurer refused to pay the claim stating that there was no coverage at the time of the death because she stopped working full-time and the coverage was not available to part-time employees.
The claim denial came as a shock to the entire family, because the insured paid and the company accepted monthly premium payments for the life insurance coverage and there was no correspondence pointing to any problems with the coverage. The employer withdrew premiums from the insured’s check every month and sent several “Benefits” letters to her assuring that the coverage was in effect. Needless to say, the children beneficiaries were confused and felt wronged by the entire experience.
Our law firm appealed the denial of benefits with both the insurance company and the employer. The investigation revealed that the employer made material misrepresentations to the insured on which she relied to her detriment. Additionally, both the insurer and the employer were negligent in properly maintaining the insured’s records which led to this wrongful denial. Our clients reached a settlement with the employer and the insurer without resorting to litigation.