About Employer-Provided Life Insurance Claim Denials
If you work in the United States, you may get insurance coverage from your employer, such as health and life insurance. One of the benefits that many employers offer is group life insurance, which can help you save money and avoid buying a personal life insurance plan. However, there are some things you should know about employer-provided life insurance.
Employers Have Duties to Employees
When employers offer group life insurance to their employees, they have a responsibility to inform them about the details and conditions of the plan. Life insurance claims are usually approved; only less than one percent of all claims are denied, according to experts. But, if your claim is denied, it can be very distressing. Some policyholders have faced difficulties with their employer-provided group life insurance, so many states have passed laws that require employers to disclose everything about their group life insurance plan to every employee who participates. For instance, in many states, employers have to notify employees who quit their job that they can convert their group life insurance plan to a personal plan. This option can be very valuable for employees who leave, especially if they have health issues that make it hard for them to get a personal life insurance plan. Being able to convert the policy without a medical exam can be very beneficial for these former employees and their families. It can also be important when they join the job.
Why Some Claims Are Denied
There are some reasons why a life insurance company may reject a claim. Some common reasons for a claim rejection are: the insured person passed away in the first two years of the policy, or the insured person lied about their health when they applied for the policy. When they apply, the insured person has to answer questions about their health, weight, age, income, and criminal history, and if the insurance company discovers a falsehood in that information, they may reject the claim. The falsehood has to be relevant to the reason for the rejection to be valid. Sometimes, a rejection happens because the employer made a mistake, like not paying the premium. Sometimes, they let the policy lapse. Even if the policyholder/employee thinks they have insurance, the insurance company may disagree. Insurance companies often use a policy lapse to reject a claim. If your employer fails to pay one month for any reason, even after ten years of paying on time, the insurance company will cancel the policy and reject a claim. Another major reason for rejection is because the claim is not covered. Insurance companies often specify what they do not cover, and if the employee’s situation is not covered by the policy, they will often use that to reject the claim.
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