Recently there has been a lot of successful litigation by beneficiaries of group life insurance policies provided by employers. In these cases, the insured either retired, quit, or was fired, or became disabled and stopped working, and then passed away.

An employer providing group life insurance to employees is required by the insurance documents to provide notice of options to convert the policy to an individual policy, and the attendant deadlines, to employees who leave for whatever reason. An employer is also required to notify a disabled employee that he or she can file an application for waiver of premiums while out of work so that group life insurance coverage continues uninterrupted.

When an employer fails to notify employees of these options, for whatever reason, and group life insurance coverage subsequently lapses, that employer can be liable to the beneficiaries for damages. Our life insurance beneficiary firm has successfully litigated many of these cases. For example, recently we were able to get a beneficiary paid in full when the insured was an employee transferred within the same company to a location in a different state, who never received the employer’s conversion notice due to an address mix-up. The policy itself provided alternately for a 31-day conversion period and a 62-day conversion period. We successfully argued that although the insured died after the 31-day period, insured died within the 62 day period.

We get to the details of the policy and all the facts surrounding a claim denial to make sure our clients get paid. Keep in mind that although this example is of a real client, we cannot guarantee these same results in any other case.

First, What Is Group Life Insurance Through Work?

Employers often offer their employees a small amount of group life insurance free of charge as part of a benefits package. Supplemental insurance that the employee pays for may also be available, for which an employee must likely have a medical exam to show insurability.

It does no harm to accept coverage under your employer’s free group life insurance policy.  However, most people in good health need not buy more of an employer’s life insurance than the free amount because they can likely buy any additional life insurance they want more economically in the open market.

What Happens to Life Insurance When You Change Jobs, Quit Your Job, Are Fired From Your Job, or Retire From Your Job?

The answer is, your employer will cease paying premiums on your behalf and the policy will eventually lapse, meaning, you will no longer be enrolled in or covered by your former employer’s group life insurance plan.

Your employer is required to inform you of your options with regard to the life insurance, as well as the deadlines for taking action on those options, when you leave your job, no matter what the reason.

How Long Does Life Insurance Last After Termination?

When you retire, quit, or otherwise leave a job where you are covered by group life insurance, if there is the option to convert all or part of your coverage to a personally-owned policy, your employer is required to notify you of it. In most cases you must exercise this option within 30 days of leaving the employer.

Employer Life Insurance Portability

Can you keep your life insurance when you retire, or after leaving a job? The answer in most cases is yes. An employee leaving his or her job usually has four choices:

  • cancel the policy,
  • port the policy to another group plan with your new employer (only if the policy is with the same insurer), or
  • convert the policy to an individual life insurance policy if the plan allows.
  • Shop for another life insurance provider

If you convert to an individual policy you and you alone as the policyowner will be responsible for paying premiums. This is how you can keep your employer life insurance after retirement. This is also how you can keep your employer life insurance after termination.

If you decide to convert your policy, usually, the conversion policies are permanent policies with cash value and level premiums for life. This may be expensive, but it’s a bargain for someone who can’t qualify for other life insurance coverage because of medical issues.

Employer Life Insurance After Disability

When an employee becomes disabled and takes a leave of absence from work or is terminated, the group life insurance premiums are waived if that employee filed an application for waiver.  The employer is required to inform the disabled employee of this and the deadline for filing the waiver application. If the waiver is granted, life insurance coverage continues uninterrupted for the disabled employee.

Problems arise when an employer fails to provide the required notices, the policy lapses because no one is paying the premiums and there is no waiver, the employee then passes away, and the employee’s beneficiaries file a claim with the insurer. The employer who failed to give the required notice is at fault.

I’m the Beneficiary of a Group Life Insurance Policy That Lapsed – What Can I Do?

You should contact a life insurance beneficiary attorney immediately to help you with your claim. An attorney can help you find out if the insured’s employer was at fault for the policy lapsing and/or for failing to provide the required notices to the insured.

For example, we recently got a beneficiary’s claim paid when the insured was out of work on short-term disability, and the employer failed to provide the insured with an application for conversion within the 31-day period required. In another case, we got the beneficiary paid when the insured was forced to leave work on long-term disability due to colon cancer, and again, the employer failed to provide notice of the right to convert to an individual policy.

While these are real-life pay-outs, of course we cannot guarantee the same result in any other matter. But our firm has seen many of these types of cases and has been successful in getting many, many beneficiaries paid. Let us help you get paid as well.

Written By: Chad Boonswang
Chad G. Boonswang, Esquire is a litigation lawyer based in Philadelphia, PA. Selected as an ASLA 2014, 2015, 2016, 2017 and 2018 Top 100 Litigation Lawyer, Mr. Boonswang plays to win. As a lawyer, athlete, and scholar, he has always put in the energy, time, and commitment to be the best. After working for several prominent law firms in Philadelphia, including Montgomery McCracken Walker & Rhoads LLP, he founded his own practice in 2002.  Since then Chad has recovered tens of millions of dollars on behalf of his clients from life insurance claims and catastrophic injury cases.  Year after year, he has earned a 10.00 Superb rating on Avvo.

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