ERISA life insurance plans are policies that are provided as a benefit by employers. These types of plans fall under the legal precedence of the Employee Retirement Income Security Act if there exists a legal conflict between the parties involved. While there are some work-related plans that fall outside of this Act, any plans that fall under the Act will be under a more strict situation by which they must follow statutory requirements. While many individuals that are offered these life insurance plans as a work benefit are thrilled by it, it is important to understand that there are negatives that come with the plan. In fact, there is one big negative that comes with any sort of life insurance plan - the years of investing in a plan with that risk that a claim might end up being denied. When it comes to ERISA life insurance plans, there are many reasons a claim might be denied. In some cases, these denials might actually be fully within the insurance providers right and they may have a legitimate reason for denying a claim. That being said, let’s look at some of the more common reasons ERISA life insurance claims are denied:
- Death During Contestability Period - during the first 2 years of an ERISA life insurance plan there is a contestability period. This is similar amongst most types of life insurance. If the insured dies during this time period, the provider has the ability to investigate the insured information for accuracy and fraud. If any faulty information was provided, the provider is justified in denying a claim.
- Cause of Death Not Covered - live most life insurance plans, there are exceptions to payout for an ERISA life insurance plan. For example, self-inflicted injuries or suicide might be some exceptions as to why a beneficiary might not receive a payout.
- Failure to Disclose Information - while an ERISA plan may not always require a health pre-screening, the paperwork will often request certain information about the individual. If the insured individual failed to provide accurate information about themselves during the paperwork process, information that comes to light later on may render the plan unenforceable.
- Fraud - Similar to the reason above, an insurance provider will be able to deny a claim based on fraudulent information. In the event that someone obtains insurance under false pretenses, their beneficiaries might have to suffer the consequences when a claim is denied.
- Failure to Pay Premiums - Same as if you were to stop paying your electric bill or mortgage, the party expecting to receive those payments will likely be unhappy if the money doesn’t arrive. As such, expect your insurance provider to deny any claims and cancel the plan if payments are not sent.
Taking all these various reasons for a denial in to account, one can see that an ERISA life insurance plan is far from a sure bet as far as beneficiary claims are concerned. While there are many reasons one might be denied an ERISA life insurance claim, this does not mean that your particular denial is justified. If you have been wrongfully denied, do not settle for the provider’s reasoning. Get in contact with an experienced legal team to help get you the money you rightfully deserve.