Group life insurance claims are frequently denied not because the policy excludes coverage, but because of administrative failures in how the employer or plan administrator handled enrollment, eligibility, or recordkeeping. These denials are most common in employer sponsored plans governed by ERISA.
In these cases, the dispute often centers on what the employee was told, what the employer documented, and what the insurer ultimately recorded.
Why Group Life Insurance Claims Are Different
Unlike individual life insurance, group life coverage depends heavily on employer maintained records. Enrollment elections, coverage amounts, eligibility dates, and beneficiary information are often handled through payroll systems or human resources departments rather than directly by the insurer.
Errors at this level can surface only after a claim is filed.
Enrollment and Evidence of Coverage Issues
One common cause of denial occurs when an employee believed coverage was in place, but the insurer claims enrollment was incomplete. This may involve:
Enrollment forms never transmitted to the insurer
Evidence of insurability forms not processed or requested
Optional or supplemental coverage elections not recorded
System errors during open enrollment
In many cases, premiums were deducted from paychecks despite the insurer later claiming coverage was never approved.
Eligibility and Employment Status Disputes
Group life insurance eligibility often depends on employment status. Claims are frequently denied when insurers assert that the employee was no longer eligible due to:
Reduction in hours
Leave of absence
Termination of employment
Failure to convert coverage after separation
Disputes arise when eligibility changes were not clearly communicated or properly documented.
Coverage Amount Misstatements
Another common issue involves discrepancies between the coverage amount the employee believed they had and what the insurer records show. This can occur when:
Employers misstate coverage levels
Payroll deductions do not match issued coverage
Benefit summaries conflict with master plan documents
Insurers often rely on internal records even when employees relied on employer provided benefit statements.
Failure to Communicate Changes in Coverage
Claims are sometimes denied after coverage reductions or plan changes that were never clearly communicated to employees. ERISA requires specific disclosures, but failures in notice are common.
When employees are not informed of changes, beneficiaries may be surprised to learn coverage was reduced or eliminated.
Administrative Errors and Data Entry Problems
Clerical errors play a significant role in group life denials. Incorrect dates of birth, misspelled names, or mismatched Social Security numbers can delay or derail claims.
While these errors may seem minor, insurers often rely on them to justify denial unless corrected through the administrative appeal process.
Why These Denials Are Heavily Litigated
Under ERISA, courts often examine whether plan administrators followed required procedures and whether employees reasonably relied on employer communications. When premiums were collected or coverage was represented as active, denials based solely on administrative errors are frequently challenged.
These cases are highly fact specific and depend on plan documents, payroll records, and communication history.
What Beneficiaries Should Do After This Type of Denial
If a group life insurance claim is denied due to administrative or eligibility issues:
Request the full plan documents and summary plan description
Obtain payroll and enrollment records
Review benefit statements and employer communications
Identify discrepancies between employer records and insurer determinations
Preserve all appeal deadlines under ERISA
Because ERISA appeals are limited, the initial administrative appeal is often the most important stage.
How This Issue Fits Into Group Life Insurance Disputes
Denials based on employer or plan administration errors are a specific subset of group life insurance disputes. They differ from misrepresentation, lapse, or exclusion cases because coverage is denied based on plan mechanics rather than policy terms.
For broader discussions, see your Group Life Insurance Denials and ERISA Life Insurance Claims pages.