Another Employer Life Insurance Claim Wrongly Denied Before Help Arrives
The Center for Life Insurance Disputes challenged both the employer and insurer to win another denied life insurance claim.
Sally, a single mother, was a dedicated nurse for an Arizona hospital for 20 years. As soon as she was eligible she signed-up for the employer life insurance plan and the employee life insurance plan offered to employees, and she even added more so her son would have some financial support in the event of her death. Which, thanks to Covid-19, came all too soon.
Sally terminated her employment with the hospital on October 31st.
When Sally terminated her employment she was supposed to receive a written offer from the insurer allowing her to continue her life insurance coverage. If she accepted the offer she would have to make the premium payments herself. According to the life insurance Policy, that offer letter was supposed to have been sent to Sally within 30 days of her termination which was between October 31 and November 29.
On November 19th , before receiving the offer letter, Sally went into an induced coma. When the 30-day notification period passed the insurer cancelled her life insurance coverage. And the hospital marked her record as having declined to continue the coverage.
She never came out of the coma and she died on December 12th , in the same hospital for which she’d been a long-term employee.
Sally’s son tried to make a claim for benefits but was quickly shut down. The insurer refused to send him claim forms and the employer told him there was no active coverage because Sally never accepted the offer to continue the policy. Feeling both distraught and angry, he contacted the Center for Life Insurance Disputes for help.
The Center for Life Insurance Disputes obtained a copy of the offer to continue coverage letter and reviewed all the terms of the life insurance policy. The date on the offer letter was December 1st — 32 days after Sally terminated employment.
The policy had a clause that said if the offer to continue coverage isn’t received by the insured within 30 days of terminating employment they’re automatically given an additional 15 days from the date they do receive the offer letter.
The employer and insurer assumed that the offer letter had been sent and received by Sally within the contractually allotted time, but they never checked to see if it actually had. Instead, each gave Sally’s son bad information and tried to obstruct his effort to make a claim.
The offer letter was dated after the delivery deadline. It was clear that Sally should have been granted at least 15 more days to accept or deny the offer to continue her life insurance. The Center presented all evidence to both the employer and the insurer. After some minor haggling both conceded and the claim was paid.
“If we hadn’t gotten a copy of the life insurance policy we’d never have known about the 15 day extension,” said Stephen Burgess, president of the Center for Life Insurance Disputes. “Most people have no reason to think about it but when an employee dies access to things like enrollment forms, beneficiary designations and policies all get blocked from beneficiaries because the website access to that employee’s benefits gets shut down and insurers won’t share the historical information.”
Burgess goes on to say, “Employer life insurance plans are some of the least consumer-friendly plans in the market. Almost all rules favor insurers and employers when there’s a dispute over claims.”
He recommends that anyone enrolled in an employer life insurance plan get a copy of the policy from the plan administrator and keep it saved on a computer or in a file. Likewise, with enrollment forms and beneficiary designations.
Not all employer life insurance claim disputes work-out as well. Getting professional representation involved as early in the process as possible is the best defense, advises Burgess.
For help with life insurance claims: (888) 428-4868
