You Should Avoid Losing Life Insurance When Gravely Ill
Millions of employees across the nation rely on their employer's group life insurance coverage to have some form of financial security in place for their families should the unthinkable happen. Often called a myriad of different names like supplemental, optional, or voluntary life insurance, these policies rarely continue once the covered employee has parted ways with their employer.
It's a typical circumstance for a beneficiary to find out later that this form of life insurance is no longer in effect when trying to file a death benefit on the formerly covered employee, and it gets denied. This situation highlights the importance of avoiding losing these essential coverages, even when faced with separation from the employer that provided it to you.
Typically, a life insurance company issues a denial of employer-based coverage benefits after the employee has been unable to work due to ongoing illness or disability over an extended period of time. It’s usually required for a worker in this predicament to go on long-term disability leave and continue to receive financial support through their employer’s policy. Assuming that one’s life insurance coverage also continues after this separation is a mistake many make in this situation. The reality is that this policy will end, and many companies use a one-year timeline for this coverage to sunset once a team member goes on long-term disability.
Survivors of a lost loved one are often faced with dramatic decisions and may not have a lot of time to do so. Worse, these choices may be required while still emotionally vulnerable and grieving. This is why life insurance benefits are crucial for beneficiaries after a covered family member dies. It helps them to avoid potentially losing their home or being overcome with debts that won’t ease up despite their loss.
Giving your family the needed financial support to continue taking care of house payments and living costs, or even fund college opportunities for grandchildren will help ensure the future security of your legacy for generations to come. Allowing an insurance claim denial to interfere with your family’s well-being should not be an option.
When an employee has been out on disability leave for a year, many employers no longer consider them an employee. Fortunately, life insurance benefits cannot just be taken away without warning. Instead, employers and their insurers must send a notice giving an end date and what options are available to continue or replace their life insurance coverage.
One popular solution for many workers faced with this scenario is converting their group policy to an individual. While they will be liable for the monthly premiums, it prevents loss in this vital coverage. Another possibility is to continue the current group policy, but this may require special circumstances to be met, including applying for any necessary waivers for premiums due each month.
Employees who face converting to an individual policy should also determine if their policies offer a waiver of premium rider. This add-on steps in when an unexpected disability makes regular monthly premiums impossible to afford and helps to avoid cancellation.
If an insured passes before converting their employer-based life insurance policy, the only other option would be to challenge the denial of benefits. This course of action is a last recourse for beneficiaries who can prove that the insurer and/or employer failed to provide notice of policy cancellation or did not provide an opportunity for conversion or extension of coverage as required by law.
Under the Employment Retirement Income Security Act (ERISA), a federal statute governing employer-based insurance plans, there are several avenues to appeal under certain circumstances. The process of appealing under ERISA is complex, deadlined, and leaves little to no room for error, which means hiring an experienced attorney in this area of law is vital.
Essentially, after a beneficiary files an appeal of the denial to the plan administrator, and it is also denied, it may be possible to bring an action to court and pursue the claim there. There are still critical deadlines for this process, as well, and these can vary depending upon any applicable jurisdictional statute of limitations imposed by the state regarding contractual law.
The more important of deadlines involves the one set forth by the life insurance policy to complete the entire appeal and suit process. These can vary and are only required to be reasonable by ERISA guidelines. For those considering this route to get the death benefits they need, a year or two-long deadline might seem like plenty of time to exhaust appeals and proceed to court.
When one considers the amount of paperwork, records requests, and other administrative tasks involved, an experienced life insurance claims attorney is better prepared for this monumental undertaking. Not only can they streamline this process, but they can also save time, which allows for a larger window for pursuing a lawsuit successfully.
If you are a loved one could be facing a long-term disability, and the potential loss of your job and employer-based group life insurance coverage, it is critical to take action right away. Speak with one of our talented life insurance claims attorneys on our legal team to determine what benefit options you may still have available to you and your loved ones.
Our firm is also here for beneficiaries who believe the insurer wrongfully denied their death benefit claim. Suppose your loved one's employer failed to give proper notice or opportunity to take advantage of additional life insurance options before cancellation. In that case, it is essential to challenge any denials of coverage as soon as possible. Contact us today to set up a consultation regarding your appeal and learn what further action you may take.