Our life insurance attorneys recently secured a full $132,000 payout after a Prudential employer sponsored life insurance claim was denied. The insurer initially refused to pay the death benefit, arguing that the insured was no longer eligible due to employment status issues. After a comprehensive legal review and sustained advocacy, we demonstrated that coverage was still in force at the time of death. Prudential reversed its denial and paid the full benefit to the beneficiary.
Employment based life insurance denials are common, particularly when the insured was on leave, transitioning employment, or recently terminated. These cases often turn on overlooked plan terms, unpaid notice obligations, and improper administration by employers or insurers.
Can Leave or Termination Justify a Life Insurance Denial?
Sometimes, but only if coverage truly ended under the plan’s terms. Insurers frequently overstate their position in group life insurance cases and rely on technical interpretations that do not hold up when examined closely.
Most of these disputes arise under employer provided group life insurance plans governed by ERISA. The rules are strict, and insurers must follow them precisely.
Active Employment Clauses in Group Life Insurance Policies
Many employer sponsored life insurance plans contain language requiring the employee to be “actively at work” for coverage to apply. Insurers often rely on this language to deny claims when an employee was:
On medical leave
On short term or long term disability
On FMLA leave
Temporarily unable to work
Between job status changes
What insurers often ignore is that many plans include continuation provisions that preserve coverage during approved leave. Courts have repeatedly held that coverage does not automatically terminate simply because an employee is not physically present at work.
Coverage often remains in force when:
The leave was approved by the employer
Premiums continued to be paid
The employer treated the employee as covered
The insurer failed to issue a clear termination notice
In the $132,000 Prudential case, the insured was still listed as covered under the employer’s records and premiums had not been properly discontinued. That alone undermined the denial.
Termination Does Not Always End Coverage Immediately
Even after termination, group life insurance coverage often continues temporarily. Many policies provide:
Coverage through the end of the month of termination
A grace period following separation
Conversion rights allowing the policy to be turned into an individual policy
Portability options under certain plans
A common failure occurs when employers or insurers do not notify the employee of their right to convert coverage. When that happens, courts frequently hold the insurer responsible if the employee dies shortly after termination.
Lack of notice is one of the strongest grounds for reversing a group life insurance denial.
Misrepresentation Allegations in Group Life Claims
Occasionally, insurers attempt to combine an employment status denial with an accusation of misrepresentation. This is most common when the insured died within the contestability period and the insurer looks for alternative grounds to deny payment.
To succeed on this argument, the insurer must prove:
A false statement was made
The statement was material
The insured knew it was false
The statement affected underwriting
In employer provided policies, these arguments often fail because employees are not asked detailed medical questions or because disclosures were accurate.
What to Do After a Group Life Insurance Denial
If a claim is denied due to leave, termination, or employment status, the denial should always be reviewed. Many are legally defective.
Important steps include:
Obtaining the written denial and cited policy provisions
Requesting the full group life insurance policy and summary plan description
Gathering employment records, pay stubs, and benefit statements
Reviewing whether conversion or portability notice was provided
Identifying whether premiums were accepted after the alleged termination date
ERISA deadlines apply, and missing an appeal deadline can permanently bar recovery.
Why These Denials Are Often Reversed
Group life insurance denials frequently fail because insurers rely on assumptions rather than plan administration facts. Courts focus on how the employer and insurer actually handled the coverage, not just what the insurer claims after the fact.
In the Prudential case, the insurer could not reconcile its denial with its own records. Once that contradiction was exposed, payment followed.
If Your Employer Life Insurance Claim Was Denied
Employment based life insurance denials are not final simply because the insurer says coverage ended. Leave status, termination timing, notice failures, and premium handling all matter.
These cases require careful plan analysis and legal pressure. When handled properly, many group life insurance denials are overturned and paid in full.