Generally, the insurance company should pay a claim within thirty days from the time all the required documents are submitted.
If you file a claim for life insurance or accidental death benefits, the insurer will need such documents as a copy of the death certificate, medical examiner’s report, autopsy report, police report, toxicology report, authorizations to release medical records, etc.
Once all the records are received the insurer will pay a claim within the next 30 (thirty) days.
Your Claim Is Delayed
A claim that is not paid within 30 (thirty) days from the time all the necessary documents are submitted is delayed.
A claim delay may last from several months to several years depending on the reasons behind the delay. It is not unusual for an insurance company to delay paying a claim for several years. Fighting a delayed life insurance claim should not be a do-it-yourself project and should always involve the assistance of a life insurance attorney.
If a claim is not paid, you need to inquire into the reasons behind the delay. It usually means there is a problem with processing the claim and you may need legal counsel to make sure your claim is not eventually wrongfully denied.
Your Claim Is Denied
When the insurance company makes a determination to deny a claim, it will send a denial letter to the beneficiary or the person who filed the claim. The denial letter needs to be specific and outline the exact reasons for denial.
Reasons Why Life Insurance Claims Are Denied
The reasons behind denied life insurance claims vary depending on the policy provisions, state and federal laws, and specific circumstances of an individual whose claim is denied. Below we have outlined the most common excuses life insurance companies use in denying claims:
We can work with you to evaluate your case and help expedite the payment on a denied life insurance claim. We have successfully handled all the situations above for life insurance beneficiaries. Call 888-512-2212 and get a free consultation.
Here are just a few case examples involving life insurance claim denials that our attorneys have handled:
What To Do If Your Life Insurance Claim Has Been Denied: Filing an Appeal
Once the claim is denied, many family members get demotivated and some may even give up further pursuit of the benefits they are entitled to. However, it is within their rights as life insurance beneficiaries to file a complaint or appeal the decision if they disagree with it. Even if the insurance company upholds the denial on appeal, you should contact an attorney to fairly evaluate your case and your chances of winning.
Here are the steps you should take in case your claim to life insurance benefits was denied:
Contact the Life Insurance Company
Unfortunately, far too often, insurance companies send vague denial letters that simply state that the claim is not going to be paid without giving specific reasons for denial. If that is the case, you should contact the insurer and demand detailed reasons for denial.
Make sure you inquire about the appeal process as well. They should tell you if the policy allows it and what you need to know to file an appeal. You will need to provide additional documentation such as medical records, an autopsy report, or insurance payment receipts to support your appeal.
In some cases, the denial letter may refer to a certain statute or a legal theory that renders the claim not payable. If this is the case, a life insurance lawyer will evaluate whether the referenced law is applicable.
Appeal the Denial of Life Insurance Benefits
Once you receive the denial letter, you can either retain a life insurance attorney who will handle the whole process of appealing the denied life insurance claim or you can file an appeal on your own.
1. File an appeal on your own
If you decide to file an appeal on your own, you need to be aware of the deadlines, laws and appeal rules. FIling an appeal on your own may certainly be less expensive than hiring a life insurance lawyer, but it is important to remember that appeals are still legal processes. Unless you have the required knowledge, filing an appeal on your own can easily become a time-consuming and stressful situation to deal with while you are still grieving. In addition, in some cases, an improperly filed appeal may limit causes of action your attorney will need to raise in a lawsuit if your appeal is denied. We recommend consulting a life insurance attorney when faced with a life insurance appeal.
2. Contact a Life Insurance Lawyer to dispute the claim
In order to successfully appeal a denied life insurance claim, you need to work with an attorney who specializes in this area of law. A life insurance lawyer working on your case will know what law controls your claim and how to appeal the denial legally.
Disputing a denied life insurance claim involves claim denial investigation, gathering supporting documents, conducting legal research and filing an appeal. This process is controlled by a set or regulations that must be followed strictly.
For example, an ERISA claim denial requires that an administrative appeal be filed within a certain period following the denial letter. Since the documents gathered and the issues raised on appeal will subsequently be reviewed during litigation, it is important to conduct a thorough investigation and legal research before filing an appeal.
Further, many life insurance claims may involve the interplay of several state and federal laws, various policy provisions, and court documents. In such cases, a life insurance lawyer will help design a successful appeal strategy and sort out possible outcomes of the case.
Many insurance companies allow an administrative appeal before the person whose claim was denied files a lawsuit. To file a successful administrative appeal, your life insurance lawyer will present a convincing argument based on the facts of the case supported by the laws governing it. It is a crucial step in getting a denied claim paid.
If you feel your life insurance claim was denied or delayed unfairly, speak with an attorney specializing in life insurance. An experienced attorney will advise you on how to proceed after a denied life insurance claim, which may involve filing an appeal, a contest, or a lawsuit to receive the money you deserve.
Our Life Insurance Lawyers Can Help Fill and Win Your Appeal
At our law firm, our attorneys handle claims that have been denied for a variety of reasons. They have extensive experience with the complex appeals procedure and litigation and have a high success rate in recovering life insurance benefits our clients were rightfully entitled to.
We offer free consultations and work on a contingency fee, so there is no legal cost unless you win and receive your life insurance payout. If you or someone you know has issues with a denied life insurance claim, call us at 888-510-2212 to speak to one of our lawyers.
Both life insurance and accidental death insurance can cover accidental drug overdose in some scenarios. While life insurance covers most causes of death, accidental death coverage pays only for accidents. People buying accidental death coverage often think that this type of insurance covers any accident as long as the person did not die of natural causes. But this is not always the case. Almost all ADD policies have several exclusions in them. Exclusions are provisions in a contract that work to exclude certain deaths from coverage and, if applied, will result in an ADD claim denial.
When individuals are covered by group life insurance plans provided by employers, they enjoy low premiums and do not have to worry about remembering to make a premium payment on time because premiums are usually withdrawn from their paychecks.
There are many other advantages to group life insurance coverage: help from employers’ Human Resources or benefits departments, open enrollment periods, ease of increasing or decreasing coverage, dependent life insurance coverage. If an employee has a question about her benefits, she may simply speak with her employer’s Human Resources department and get answers or log into her benefits portal and review the coverage.
One of the main disadvantages of group life insurance coverage is the lack of control. When your employment terminates, your group life insurance coverage terminates as well. If you leave your employment, you need to act fast to understand your options and ensure your coverage continues. Unless you take specific steps to convert or port your policy by a designated deadline, you will lose your life insurance. Without an alternative plan, your beneficiary’s claim for life insurance benefits may be denied.
provide correct information to employees about their life insurance coverage;
provide employees with a Summary Plan Description (“SPD”) outlining important terms of the Plan
act in the best interests of the employees;
provide easy access to plan documents and benefit help;
act prudently and diligently with regard to employee life insurance benefits, etc.
What Happens to Employer-Provided Life Insurance When You Change Jobs?
While ERISA provides important legal protections to both employers and employees, such protections also come with obligations. Here are some duties you should know about when you leave your job:
Your Employer Must Inform You of Your Coverage Termination
When you leave your job and stop receiving a paycheck, the life insurance premium will no longer be paid directly to the insurer. As a result, your coverage will terminate. Your employer must send you a letter explaining when you will lose your life insurance coverage and what your options are. Federal courts have held that an employer has a duty to inform a departing employee of her right to continue or port group coverage. Your employer has a duty to notify you of any changes in your life insurance coverage even if you do not ask for this information.
You Must Adhere to Strict Deadlines for Converting or Porting Life Insurance Coverage
While it is your employer’s duty to notify you of coverage termination, it is your duty to meet deadlines for converting or porting your group coverage. You can find this information in the Notice to Convert sent to you by your employer or the Plan documents which must be made available to you by the employer/insurer. Usually the period during which you can convert a policy is 31-60 days from the date your group life insurance coverage terminates. You must follow specific instructions for filling out the conversion/portability application and filing it with the insurance company. You will also be responsible for paying premiums directly to the insurance company on time to make sure your coverage stays in effect.
Denied ERISA Claims: What Happens If You Failed to Convert or Port the Policy?
If your claim has been denied due to issues with portability or conversion privileges, it is important not to give up. While ERISA is complex, it does award many protections for situations where an employer or an insurer failed to provide proper notice or correct information to the departing employee. You still have a chance to collect the insurance benefits if you submit an appeal. It is important to remember that in most ERISA denial cases you are allowed only one administrative appeal and a poorly submitted appeal rarely results in a denial overturn. Because ERISA laws are very complex and require a thorough investigation, you should consult with an ERISA lawyer who can navigate ERISA laws to your benefit, whether to submit an appeal or a file a lawsuit.
Contact a Lawyer if Your Employer Denies Life Insurance Claims Due to Termination of Coverage
If you or your loved one is on a medical leave due to an illness, it is important to learn about your life insurance benefits and what you can do to make sure they are in effect even if you are not actively working. If your loved one died while being on a medical leave and your life ERISA insurance claim has been denied, you may have a valid claim against the employer or the insurance. Our ERISA attorneys have a high success rate of recovering life insurance proceeds for our clients.
At our law firm, we work on a contingent fee basis, which means that you will pay only if we win your case. Only then will we charge a reasonable legal fee. We offer competitive fee structures and will work with you to ensure you are comfortable with the fee.
If you or someone you know has issues with a denied ERISA claim, call us at 888-510-2212 for a free consultation.
Here are a few cases successfully handled by our ERISA lawyers:
ERISA controls many group life insurance plans. Among the many rights the law gives to plan members and participants is the right to bring a suit to recover plan benefits. But, as a federal law, ERISA is complex and this extends to how claims, appeals and lawsuits are handled.
In this article, our ERISA attorneys have prepared a guide to help you better understand how ERISA lawsuits work. If you, or someone you know has issues with a denied ERISA claim, call us at 888-510-2212 for a free consultation.
What Is an ERISA Lawsuit?
An ERISA lawsuit is the process of taking legal action involving a disability, pension, or health benefit plan governed by ERISA law.
How Do ERISA Lawsuits Work?
ERISA cases allow for reasonable attorney fees to be awarded to the prevailing party if certain factors are present. When a plaintiff wins a life insurance case against an insurance company, he/she is presumptively entitled to attorney fees. Ultimately, the court will have discretion whether to grant the plaintiff’s motion to award attorney fees when the plaintiff is successful on the underlying merits of the case. Many courts rely on the following factors in deciding whether to grant attorney fees in ERISA life insurance lawsuits:
The degree of the insurance company’s fault or bad faith;
Whether the insurance company can pay the winning party’s attorney fees;
Whether an award of attorney fees to the plaintiff would serve as a deterrent for other insurers from denying similar claims;
Whether the winning party’s award of attorney fees would benefit all participants and beneficiaries of an ERISA plan.
Merits of the parties’ positions.
Actions in Courts
ERISA lawsuits are usually initiated in federal courts. Even if a life insurance denial lawsuit is filed in a state court it will most likely be transferred to a federal court of that state because federal issues (ERISA) are involved. State law claims are preempted by ERISA. ERISA actions must be filed within a certain deadline outlined in the Plan documents.
ERISA trials are very different in that most of them are decided by a judge based simply on the pleadings filed with the court. The court reviews the administrative record and decides whether the insurance company’s denial of benefits was wrongful. The administrative record consists of all the documents the insurance company has in its file and all the documents it reviewed in denying the claim.
ERISA Lawsuit Damages
ERISA lawsuits do not allow for consequential damages or punitive damages. The remedy is usually limited to the denied benefit itself and reasonable attorney fees. If, for example, due to a life insurance claim denial a surviving spouse cannot make mortgage payments and loses her house, she cannot recover damages for the lost house even if she prevailed in her ERISA lawsuit for wrongful life insurance denial.
Life Insurance Payout
If the beneficiary whose life insurance claim was wrongfully denied wins an ERISA lawsuit, he/she can recover the denied benefit. The amount of the benefit is the same amount that would have been paid if the claim had been approved initially. The court will have discretion as to whether to grant prejudgment interest and to set a rate.
Before filing an ERISA lawsuit a claimant must exhaust her administrative remedies first. When faced with an ERISA life insurance claim denial, the beneficiary will have to file an administrative appeal before filing a lawsuit. The administrative appeal is a mandatory step in the ERISA appeal process. The administrative appeal must be filed within the deadline indicated in the Plan documents. The deadline is usually 60 or 180 days from the date on the denial letter. If the appeal is denied and the Plan documents do not allow for a second appeal, the claimant may then file an ERISA lawsuit.
Who Can Sue Under ERISA?
By statute, there are only four parties who may sue under ERISA: plan participants, plan beneficiaries, the Secretary of Labor, and plan fiduciaries. However, most ERISA lawsuits are filed by an employee or former employee against their employer or insurance company.
When Can You File a Lawsuit: ERISA Statute of Limitation
ERISA does not provide a statute of limitations. Usually, the plan’s insurance policy has a provision that designates separate deadlines for filing administrative claims, appeals, as well as lawsuits. Failing to file in time could leave you without any recourse.
ERISA petitioners whose ERISA life insurance claims have been denied must exhaust the mandatory administrative review process before bringing a court action for judicial review.
A plan’s participant’s cause of action under ERISA §502(a)(1)(B) does not accrue until the plan issues a final denial. However, a plan and its participants can agree to commence the limitations period before that time.
If your ERISA claim has been denied, please consult with an ERISA life insurance attorney to see what the limitations provision is. Generally, the plan can adopt any limitation period but a contractual limitations provision is enforceable as written so long as the limitations period is of reasonable length and there is no controlling statute to the contrary.
The plan can adopt any limitation period, as long If the limitation period is unreasonably short or there is a controlling statute to the contrary, the plan’s limitation period may be unenforceable.
Litigation Process: How Do You File a Lawsuit?
You cannot file an ERISA suit immediately after you were denied your employer-provided life insurance benefits. You must exhaust all administrative remedies before bringing a lawsuit. Otherwise, it will be barred. We recommend consulting with an ERISA attorney when filing an appeal since you have small chances of winning without a comprehensive legal brief. If your appeal is denied, they can use that during the course of the lawsuit.
An ERISA lawsuit is filed when your attorney sends a summons and a complaint to a federal court. The insurance company has 21 to 42 days to respond. When litigation is ongoing, the plaintiff and the insurance company may still discuss and reach a settlement. If no settlement is reached, the case will proceed to trial. In ERISA cases, most cases are decided by a judge during a bench trial. A bench trial is a trial before a judge only and involves reviewing the administrative record and legal briefs submitted by both parties. ERISA lawsuits may resolve in favor of the beneficiary, the insurance company or the judge may send the case back to the insurance company for re-evaluation. The losing party may file an appeal.
Our ERISA Attorneys Can Help File and Win A Lawsuit For You
It is important to consult with an experienced life insurance attorney if you consider filing a lawsuit or appealing a denied life insurance claim. If your ERISA claim has been denied, call our law firm at 888-510-2212 for a free consultation. We have successfully reversed many denied life insurance claims on appeal and will help you collect on your wrongfully denied claim fast.
Our lawyers work on a contingent fee basis – that means that you will pay attorney fees only if we win your case. Only then will we charge a reasonable legal fee. We take pride in offering competitive contingent fee structures and will work with you to ensure you are comfortable with the fee.
Here are a few cases successfully handled by our ERISA lawyers:
Many group life insurance plans maintained inside the United States are ERISA plans. ERISA plans are employer-sponsored plans that usually deduct premium payments from the employees or make contributions by the employer. ERISA does not apply to welfare group plans established or maintained by government organizations or religious institutions. In spite of the fact that ERISA offers many protections to plan participants, many claimants are denied their benefits.
ERISA laws are very complex and can be very case-specific. A person who just lost a loved one may have a hard time navigating an ERISA life insurance claim denial without legal help. If your ERISA claim has been denied, be aware of a time frame within which you are expected to file a comprehensive legal brief. The administrative appeal is the first mandatory step in fighting an ERISA claim denial and you should consider consulting a lawyer.
In this article, our ERISA attorneys have prepared a guide to help you better understand how ERISA works, what rights plan beneficiaries have and how to fight a claim denial. If you, or someone you know has issues with a denied ERISA claim, call us at 888-510-2212 for a free consultation.
What Is ERISA and How Does It Work?
ERISA, Employee Retirement Income Security Act of 1974, is a federal law that governs all claims for benefits from an employee or group welfare benefit plan. An employee welfare benefit plan is any plan, fund, or program established or maintained by an employer or by an employee organization which provides employee benefits such as life, health, or disability. As such, if your right to benefits was through a plan established by a private sector employer or an employee organization (e.g., a labor union), it is most likely governed by ERISA.
The purpose of ERISA is to require plans to provide participants with accurate plan information about plan features, outline fiduciary responsibilities for the plan administrator and managers, establish a complaint and appeals process for participants whose benefits have been denied, and give participants the right to sue for denied benefits and breaches of fiduciary duty.
What Plans are Covered by ERISA?
In most cases, when the employer buys life insurance for its employees, it is provided through an insurance company. If there is a plan and the plan was “established or maintained” by a private sector employer (or employee organization), it is probably covered by ERISA.
There are two exceptions to ERISA coverage:
Plans sponsored by churches and church-related entities are not covered by ERISA, unless an election is made to have ERISA coverage.
Plans established or maintained by government entities for their employees, or plans which are maintained solely to comply with workers’ compensation, unemployment, or disability laws are not covered by ERISA.
How Do I Know If My Benefit Plan Is Controlled By ERISA?
If your Employer is engaged in any of the following activities, a Court will likely find that the employer “established or maintained” the Plan, mandating ERISA coverage.
The employer is paying all or even part of the policy premiums;
The employer is urging employees to join the plan;
The employer is retaining some of the deducted premium to administer the plan;
The employer is keeping track of who is in the plan;
The employer is answering questions for the plan members about their coverage.
What Does an ERISA Life Insurance Attorney Do?
A life insurance attorney specializing in ERISA analyzes how an ERISA plan operates and makes sure plan participants are offered all the protections under the law. If a life insurance claim is wrongfully denied, an ERISA attorney will represent beneficiaries in their ERISA appeal and litigation to recover the denied life insurance benefits. You should hire a life insurance lawyer specializing in ERISA if:
your employer/insurer provided you with incorrect or misleading information about your life insurance coverage;
your employer/insurer terminated your life insurance coverage without informing you;
your employer/insurer failed to advise you of your rights to your life insurance coverage if your employment terminated;
your employer/insurer withdrew premiums from your paycheck for life insurance coverage that did not exist;
Your employer/insurer approved your evidence of insurability (statement of health) and withdrew premiums from your paycheck for increased coverage but denied your life insurance claim after the insured’s death;
your employer/insurer failed to provide you with a copy of the life insurance policy/Summary Plan Description or denied you access to plan documents regarding your life insurance benefit;
your employer/insurer revoked you as a beneficiary on a life insurance policy without explanation.
ERISA Claims Procedures
Before an ERISA life insurance claim is filed, it is important to check your Summary Plan Description and Summary of Benefits and Coverage to ensure the beneficiary is eligible to receive benefits. Plans usually provide specific definitions for eligibility. For example, in some cases, a dependent can only be insured up to a certain age and stops being considered a dependent if his/her status changes. In other cases, only full-time employees who are actively at work are eligible for coverage.
The Summary Plan Description provided by the plan must have information on where to send your completed claim forms, what additional documents to include, and the plan’s contact information. If you decide to file an ERISA life insurance claim yourself, you may want to contact your employer/HR and request claim forms and all relevant details in filing a claim. Keeping a thorough record of your communications with the employer and the insurance company is essential in making sure you do not miss a deadline.
If you want to make sure you file the claim and do it correctly within the required time frame, our lawyers can help. Call 888-510-2212 for a free case evaluation.
Denied ERISA Claims
If your life insurance ERISA claim is denied, the insurance company must send you a denial letter in writing. The denial letter must include the following information:
The specific provisions in the insurance plan on which the denial is based;
What documents and the insurance company reviewed in deciding your claim;
What additional information you need to include in your appeal for the insurance company to reconsider your original claim;
How to correctly submit an appeal;
The deadline to file an appeal;
A description of your rights as an ERISA beneficiary to file a lawsuit to recover the proceeds.
ERISA Appeal Process
An ERISA appeal is the procedure you must follow if your claim for benefits was denied under ERISA law.
In most ERISA cases, you need to submit an administrative appeal before filing a lawsuit against the insurance company or the employer. Otherwise, your court action may be barred. To maximize your chances at recovering the full and fair benefits you are owed, you need to consult with a lawyer that has experience with ERISA cases.
How to File an Appeal Successfully
The denial letter which the insurer sends to the beneficiary usually sets out a procedure for filing an ERISA appeal – it provides the appeals unit address, ERISA deadlines and the information on the independent review examiner who will conduct the review.
It is in your best interests to have the assistance of a competent, experienced ERISA attorney when you file an appeal.
However if you decide to file an appeal on your own, keep in mind the following tips:
As a beneficiary to a denied ERISA claim, you are entitled to only one appeal;
The deadline to file an ERISA appeal is usually 60 days from the date you receive the denial letter. This means that within sixty days you need to investigate the denial, gather supporting documents, draft the appeal and file it;
Failure to appeal before the given deadline means you waive your right to pursue the claim any further;
If you call the insurance company and state that you “want to appeal the denial of benefits,” the insurer may treat your statement as an appeal and will start a review process immediately. If you later file a formal appeal, it will not be accepted. Make sure that you clearly state that you intend to file an appeal in the near future and now want to get the life insurance policy and other relevant records in order to prepare for the appeal;
Every piece of information you plan to include in a lawsuit must be part of the record during the appeal;
Any information you omit may never be heard or considered by a court.
Review of an appeal usually takes 60 days and the insurer will notify you in writing if there is a delay. In rare cases where the appeal review is conducted by a committee or board of trustees which meets at least quarterly, making a decision on your appeal can take up to 120 days;
Once the final decision has been made, you will be told the reason and the plan rules upon which the decision was based;
If your appeal is denied, you cannot file another administrative appeal with the help of a lawyer.
Your appeal should include:
New evidence – documentation, legal briefs, medical opinions, research reports, expert reports, etc.;
The complete file on the insured from the insurance company before initiating an appeal. The file may include the life insurance policy, doctor’s notes, medical records, videos, expert opinions, internal call/email log, videos and recorded phone conversations;
Relevant ERISA provisions;
Additional statements from doctors if the claim denial is based on health history of the insured;
Written affidavits from your friends and family members if they are familiar with the insured’s health/condition/circumstances and can support your position.
Unfortunately, even if with these precautions, an appeal prepared without a legal brief is rarely winning. ERISA laws are very complex and require a thorough investigation. Consider consulting legal counsel. Life insurance lawyers at our law firm have the experience you need to help you recover your ERISA benefits.
What If Your Appeal Was Denied: ERISA Lawsuits
ERISA mandates that before a beneficiary files a lawsuit after her claim has been denied, she should exhaust all administrative remedies – submit an internal appeal. In other words, if your life insurance claim is controlled by ERISA and it has been denied, you can only file a lawsuit after your administrative appeal is denied. Read more about how to deal with ERISA litigations.
If you consider filing a lawsuit to review a denied claim under ERISA, our law firm can help. We have successfully reversed many denied life insurance claims and can help you recover your wrongfully denied benefits fast.
Our ERISA Attorneys Can Help Win Denied Claims and Appeals
At Kadetskaya Law Firm, we have a high success rate of recovering the benefits our clients were rightfully entitled to.
Our ERISA attorneys work on a contingent fee basis – it means you will not need to pay unless you recover the proceeds. Only then will we charge a reasonable legal fee. We take pride in offering competitive contingent fee structures and will work with you to ensure you are comfortable with the fee.
If you or someone you know has issues with a denied ERISA claim, call us at 888-510-2212 for a free consultation. We have the experience you need to win your case.
Here are a few cases successfully handled by our ERISA lawyers:
When individuals have a life insurance policy provided by their employer, such life coverage is called group life insurance. When the insured stops working for the employer, continuous coverage may be available if the group plan offers a Conversion and/or Portability option that allows the insured to port or convert their group coverage into an individual policy.
This privilege comes with obligations for the employer and/or insurance company to give notice of conversion rights and for the employee to choose an option and apply for such coverage by a designated deadline. When employers or insurance companies fail to notify insureds whose employment terminated, coverage may be lost.
Liability in such cases depends on the group policy and both the insurer and employer may be liable for a denied claim. Under the law, both the insurer and employer have a duty to act reasonably, prudently, and in the best interests of the group plan participants.
Conversion Privilege: What Does It Mean to Convert a Life Insurance Policy?
Conversion privilege states that if life insurance ends due to the end of employment, the end of membership in an eligible class, or reduction of benefits, an insured will be entitled to an individual policy of life insurance. The policy is usually issued by the same insurance company without evidence of insurability.
The individual policy is in an amount not in excess of the amount of life insurance which ends under a group policy. The insurance company extends coverage during the period allowed for conversion. Thus, if an insured dies during the 31-day period following the termination of insurance, the insurance company will pay the amount of life insurance for which an individual policy could have been issued.
What Does Life Insurance Portability Mean?
Portability means continuing life insurance coverage of the same format and amount when the insured changes employers or retires. When an employee has group life insurance provided to him by his employer, that plan is in force for as long as the employee is actively working. When an employee is terminated, retires, or changes employment, the group coverage may no longer be available to him. In such cases, the insured will ask to port his coverage or, in other words, change it to an individual plan providing the same protections. The employee needs to apply for portability within the time frame listed in the policy.
What Happens If You Fail to Convert or Port Your Group Life Insurance?
To make sure an insured carried coverage under a converted or continued policy, she must have applied for converted or continued coverage by a designated deadline. Many group policies set forth the process and applicable deadlines for submission of a conversion application or a portability request. When an insured neglects to follow the instructions outlined in the policy, the insured risks a lapse in coverage. However, an insured may be relieved of this duty if there are extenuating circumstances if she didn’t receive a copy of the policy or if the employer failed to notify of policy changes or provided incorrect or misleading information regarding the insured conversion or portability right.
Employer Fiduciary Obligations Under ERISA
If a group policy offers a conversion privilege, the procedure for applying for it is usually outlined in the section titled “Conversion” which specifies whether the insurer or the employer has an obligation to inform the departing employee of his/her conversion rights. If the employer fails to notify the employee whose employment terminated of how to convert, the liability for a denied claim may fall on the employer. Similarly, the insurance company may be in breach of its fiduciary duty under ERISA if it had an obligation to inform but failed to do so.
Give a Copy of the Policy to the Insured
Needless to say, an insured cannot comply with the policy’s continuation or conversion application deadline if the insured was never provided with a copy or the policy or an access to the plan documents. In the majority of group life insurance cases, the plan administrator must provide a copy of the policy to all participants in the plan and may be liable for denial of benefits if it failed to do so.
Notify of Conversion & Portability Rights
Most group life insurance plans are subject to ERISA. ERISA does not impose a duty on a plan to provide notice to plan participants other than the summary plan description and information of the benefits plan. Although ERISA does not require insurance companies or employers to provide an insured additional notice of a right to continue or convert coverage, some plan employers assume this duty voluntarily. If an employer promised an insured to send her all the necessary notices for conversion or portability but failed to do so, the employer may be liable for the denied claim.
Any notice that is provided by an employer or an insurance company should be clear and unambiguous. Some examples of misleading or ambiguous conversion notices are notices that do not inform an insured of the deadline or the procedure for applying; notices sent to the wrong address or the wrong person, notices received by an insured after the deadline for applying, etc.
A clear conversion notice will inform the departing employee of 1) the date his/her group life insurance coverage will end; 2) the deadline for submitting a conversion application; 3) a step by step instruction on how to convert the group policy into an individual policy; 4) the premium amount and due date; 5) what happens if the death occurs during the conversion period.
Provide Accurate Information About the Policy Changes
Often, terms and conditions of a group life insurance are misinterpreted and misrepresented to employees. Employers and insurance companies routinely make mistakes that result in life insurance claim denials.
One of the most common situations resulting in a claim denial is where an insured employee stops working because of disability or retirement and receives a letter from her employer stating that her life insurance coverage will remain effective. This statement may or may not be correct. It depends what her group life insurance contract says about coverage during disability and retirement.
In cases where a policy does not cover retirement and disability, but a retired or disabled employee receives misrepresentations from her employer that the coverage will stay in effect, she may not seek additional or alternative coverage in reliance on her employer’s misrepresentations. After the employee’s death, her beneficiaries are faced with a denied life insurance claim, funeral costs and other financial burdens.
A life insurance claim, in this case, will be denied due to an insured’s failure to convert a group policy into an individual policy within 31 days starting at the date her employment terminated. If an employer provided incorrect or misleading information regarding an insured’s conversion or portability right, the employer may be liable for the total amount of the denied life insurance claim.
Contact an ERISA Lawyer If Your Claim to Group Life Insurance Benefits Has Been Denied
What recourse do you have as a beneficiary whose claim has been denied due to the insured’s failure to convert or port coverage? You may have a claim against the insured’s employer and the insurance company for the total amount of the denied claim.
Here are a few cases related to denial due to portability, conversion privilege, or lack of coverage, successfully handled by our ERISA lawyers: