$132,000 Denied Life Insurance Claim Successfully Recovered
We are pleased to announce the successful resolution of a $132,000 denied life insurance claim. In this case, the insurance company initially refused to pay the death benefit, citing issues related to the policyholder’s employment status. After a thorough legal review and persistent advocacy by our firm, the denial was reversed, and the full benefit was paid to the rightful beneficiary. Cases like this highlight how insurers may attempt to exploit gray areas in group or employer-provided life insurance policies to avoid payment—but our legal team knows how to fight back.
Can Taking Leave or Termination Be a Valid Reason to Deny a Life Insurance Claim?
In some cases, life insurance claims may be denied if the insured was on leave or terminated prior to death—but only if coverage had lapsed according to the policy’s terms. These denials often involve group life insurance plans offered through an employer, and the legal details can be complex.
Here’s how insurers may try to justify such denials—and what you need to know to fight them.
1. Group Life Insurance and Active Employment Requirements
Many group life insurance policies contain a clause requiring the employee to be “actively at work” in order for coverage to be in effect. If an employee goes on leave—whether for disability, medical reasons, FMLA, or personal matters—the insurer may argue that the employee no longer met the “active status” requirement. Similarly, if the employee was terminated before death and did not convert the group policy to an individual one, the insurer may claim the coverage ended with the job.
However, courts have repeatedly found that coverage should continue under certain conditions, including:
The employee was on approved medical or disability leave
Premiums were still being paid
The employer failed to provide proper notice of conversion rights
The insurer accepted premiums or failed to terminate coverage in writing
2. Termination Doesn’t Always Mean Coverage Ends
Even if an employee is terminated, group life insurance may continue for a grace period or through conversion and portability options. If the employee dies shortly after leaving employment, and was not informed of the option to convert the policy, the beneficiary may still be entitled to the benefit. Employers and insurers sometimes fail to inform employees of their rights or mishandle paperwork—creating grounds for challenging the denial.
3. Insurer Claims of Misrepresentation or Non-Disclosure
In rare cases, an insurer may also attempt to deny a claim by alleging that the insured concealed a terminal condition or other material fact during the application process. This is most common with individually underwritten policies but can arise in group policies with medical questionnaires. These denials usually occur during the contestability period (first two years of the policy). To successfully deny a claim, the insurer must prove that the misrepresentation was intentional and material.
If the insured disclosed their medical history truthfully or was not asked relevant questions, these claims can often be defeated with legal help.
What to Do If a Life Insurance Claim Is Denied After Leave or Termination
If a claim is denied on the grounds that the insured was on leave, terminated, or no longer actively employed, do not assume the denial is final. Many such denials are successfully reversed with legal intervention. Here’s what you should do:
Request a written denial letter detailing the exact reason for denial and the policy provisions cited
Obtain a copy of the life insurance policy and any summary plan description if provided through an employer
Gather employment records, including pay stubs, leave approval letters, COBRA or benefit continuation documentation, and notices (or lack thereof) regarding conversion rights
Consult a life insurance attorney experienced in employer-provided coverage disputes
Our firm has overturned numerous denials involving employee leave, termination, and policy conversion issues. We have successfully recovered benefits in ERISA-governed claims and private employer group plans nationwide.
We Handle All Denied Life Insurance Claims—And We Win
Whether your claim involves misinterpretation of “active employment,” failure to inform of conversion rights, or an unfair accusation of misrepresentation, our legal team can help. We’ve resolved claims against major insurers and employers where coverage disputes were used to wrongfully deny grieving families the benefits they were promised.
Frequently Asked Questions
Can an employer terminate life insurance coverage when an employee goes on leave?
Not automatically. Many policies include continuation clauses for employees on medical or FMLA leave. If the employer continues to pay premiums or fails to notify the employee of their conversion rights, coverage may remain in effect.
Does life insurance coverage end immediately after termination?
In many group policies, coverage ends at the end of the month or includes a grace period. The insured may also have the right to convert the group policy to an individual one. If the employee dies shortly after termination and was not informed of these rights, the denial can be challenged.
What is “actively at work” language in a policy?
This language refers to an employee being physically present and working as of the coverage effective date. However, exceptions apply if the employee is out on leave or disability and the employer continues coverage. Courts sometimes override “actively at work” clauses if the leave was approved and coverage premiums were paid.
Can life insurance be denied for someone on medical or disability leave?
Only if the policy clearly excludes coverage during leave and the employer properly notified the employee. In many cases, especially under ERISA-governed plans, benefits must continue if leave was documented and policy requirements were followed.
What is a conversion right in life insurance?
Conversion allows a departing employee to convert their group life coverage into an individual policy without a medical exam. If the employer fails to inform the employee of this option and the employee dies shortly after termination, courts often hold the employer or insurer liable.
Do ERISA rules protect employees in group life insurance plans?
Yes. Under ERISA, employers and insurers must follow strict rules in administering benefit plans. If a denial arises from mishandling of leave, termination, or conversion, ERISA litigation may be used to recover the benefit.
What if the insurer says the insured wasn’t eligible at the time of death?
This is a common tactic in group policy denials. If the insured was still on leave, had recently been terminated, or was never given a chance to convert the policy, the claim may still be valid.
Can the beneficiary appeal a denied life insurance claim?
Yes. Beneficiaries can appeal internally and, if necessary, take legal action. Time is critical, especially with ERISA-governed policies, where deadlines apply to both appeals and lawsuits.
Do I need a lawyer to dispute a denial based on leave or termination?
It’s highly recommended. These claims involve complex policy language, employment records, and often ERISA regulations. A lawyer can help gather the necessary evidence and make the strongest legal arguments for overturning the denial.
What does your firm charge for denied life insurance claims?
We work on a contingency fee basis, which means you pay nothing upfront. We only get paid if we win your case and recover the denied benefit. We also offer a free consultation to review your situation and options.