Articles Tagged with: ERISA
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Life Insurance Conversion Privilege

Life Insurance Conversion Privilege

What is life insurance conversion privilege, and how does it affect policyholders and their beneficiaries? Find out from the life insurance lawyers at Boonswang Law, who have gotten beneficiary clients paid in every state in the nation when life insurance companies delay or deny claims for death benefits.

If the life insurance company denied your claim for death benefits due to lapse, termination, or failure to convert, call us. Often the lapse in coverage was no fault of the policyholder, and in those cases, we can get you paid. Call us to discuss your case, free of charge!

Life Insurance Conversion Privilege Definition

In general, “conversion privilege” in life insurance is a policyholder’s right to convert a life insurance policy from one type to another without submitting to a medical exam or completing a new application. Conversion privilege may also guarantee the amount the policyholder pays in premiums for coverage under the new life insurance policy. Some policies may also refer to this as a “guaranteed insurability option”.

Types of Life Insurance Conversions

Group to Individual Life Insurance

By far, the most common type of conversion carrying privilege is when an employee or former employee converts their group life insurance coverage through their employer to an individual policy. Conversion privilege guarantees individual coverage regardless of the policyholder’s health, and guarantees premium payments for a specified number of years.

Term to Permanent Life Insurance

Term life insurance is the least expensive insurance someone can purchase because it provides coverage for a set number of years, called the “term,” then expires. If a policyholder wishes to renew their coverage once the term expires, chances are that their premium payment will increase because they have aged and there is greater risk they will die within the policy term.

If a term life insurance policy carries conversion privilege, the policyholder has the option to convert the policy to permanent life insurance without submitting to a medical exam. This option allows a policyholder to maintain coverage even if they suffer health problems near the end of the term.

Conversion privilege in a term life insurance policy will likely have an expiration date, and once the policyholder converts to a permanent policy they will likely pay more in premiums. However, conversion privilege gives a policyholder with health problems the option of maintaining life insurance. If they had to apply for a new policy, their coverage might get denied due to their present health.

There are many types of permanent life insurance, but most commonly they are called “universal” or “whole” policies. 

Life Insurance Conversion Privilege Requirements

In order to convert a life insurance policy, the policyholder must strictly adhere to the terms of the provision in the policy itself. This provision will set forth the required documents, timeline, and due date, which will vary among policies.

If a policyholder fails to comply with the requirements set forth in the conversion privilege provision, they risk losing life insurance coverage. This might be a problem if the policyholder does not have multiple life insurance policies, but chances are the policyholder purchased this coverage for a reason, and unless that reason dissipated, they must carefully follow directions to convert their policy effectively.

Employer Obligations Concerning Life Insurance Conversions

Providing a Policy to the Insured

Federal ERISA law governs employer-provided group life insurance coverage, whether entirely subsidized by the employer or paid in part by the employee. Under ERISA, an employer must provide covered employees with a copy of the policy itself and inform them of the right to purchase accidental death and dismemberment coverage (AD&D coverage) as a rider.

Inform Insured of Conversion & Portability Rights

An employer has a duty to tell a covered employee of their right to continue coverage should they leave employment, and how to do so, in writing. They also must inform them of their right to apply for a waiver of life insurance premium for disability, if they become disabled.

Provide Information on Policy Changes

If any aspect of life insurance coverage changes, the employer must provide notice of that change in writing to all coverage employees.

Should You Convert Your Life Insurance?

Whether you are seeking to convert employer-provided group life insurance coverage to an individual policy, or someone holding a term life insurance policy who is considering converting to a permanent life insurance policy, there are several aspects of coverage to weigh in making your decision.

First, do you need life insurance after you leave your job or your term life insurance coverage expires? If you do, you will either need to convert your existing life insurance coverage or purchase a new policy.

Second, consider whether you will pay less in premiums when you convert than if you should purchase new coverage. This will require some research on your part. Factors such as your current age and health will affect the relative cost of each option.

Last, consider whether the needs of your beneficiaries will be best met by converting your policy or by purchasing new coverage. What are their needs? Is there an end date to those needs or are they continuing? How old is your beneficiary and what is the likelihood they will predecease you? All of these questions must be answered and weighed before you make a decision to convert an existing policy or to purchase new coverage.

Life Insurance Conversion vs Portability

If group life insurance coverage is “portable” an employee can take this coverage with them when they leave employment, and simply pay their employer the premiums. This option is usually available to employees who are younger than 69 and not leaving their employer due to illness, injury, or retirement. Most “ported” group life insurance will cover a former employee until age 70. 

Portability may be a more cost-effective option than conversion for an employee seeking to leave work but maintain life insurance coverage. The employee should compare the cost of premiums, the breadth of coverage, and whether they will need coverage past age 70 in making this decision.

Failing to Convert Your Life Insurance Policy

If a policyholder fails to convert their life insurance policy before the required deadline in term life insurance, or before the date provided in the conversion packet provided by their employer, life insurance coverage will lapse and terminate. This means that the life insurance company will deny a claim for death benefits due to lapse. However, there still may be something that can be done, and the beneficiary should appeal the life insurance claim denial.

Talk with an Experienced Life Insurance Lawyer

Unfortunately, many policyholders and employees get faulty advice from their agent or their employer and fail to effectively convert their policy as they intended. If the failure to convert was no fault of the policyholder or employee, their beneficiaries may still get a payout.

If your claim was denied due to lapse caused by failure to convert, talk with the life insurance lawyers at Boonswang Law. We investigate the cause of the lapse and if the policy would have converted but for the failure of an agent or employer to adhere to their legal requirements, we can get you paid. Call us at (855) 553-9010 to discuss your case with us, free of charge.

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What You Need to Know About Life Insurance Waiver of Premium for Disability

Strict and complex state and federal laws govern employer-provided life insurance. Despite heavy regulation, the claims of beneficiaries of group life insurance are often improperly denied.

Having represented thousands of beneficiaries whose claims were delayed or denied, we have found that employers or life insurance companies often run afoul of those laws, causing a lapse in coverage and improper denial of beneficiaries’ claims. 

If your claim was denied but the insured should have been eligible for life insurance disability waiver of premiums, we can help appeal denial of your life insurance claim and get you paid.

For an insured, if you have become disabled and your life insurance company denies your request for waiver of premium payments, you must file an appeal under ERISA. 

For a beneficiary, if your claim was denied due to lapse in coverage caused by non-payment of premiums, you should call us at 1-855-865-4335. It may be that the employer wrongfully ceased paying premiums on behalf of the insured or improperly handled the insured’s request for waiver of premium payments, or the insurance company mishandled the waiver request or improperly denied it. We will find out for you.

These are two of the most common reasons a life insurance claim is denied. In either case, you need an experienced and diligent life insurance attorney by your side to fight for your rights under the employer group life insurance policy and the Employee Retirement Income Security Act of 1974 (ERISA). Give us a call to schedule your free, no-obligation, no-risk consultation. We never get paid unless you do.

What Does Life Insurance Waiver of Premium Mean?

Life insurance coverage usually only continues as long as the premiums are paid. However, a person who is disabled and unable to work may be entitled to continuing coverage under the employer’s group life insurance plan and have the premium payments waived during the period of disability.

Most group life insurance policies will have a waiver of premium provision or a disability premium waiver rider that will set forth the required information and documentation for waiver of premium for disability.

What is the Waiting Period for a Waiver of Premium Rider?

The waiver of premium waiting period varies among insurance companies, but commonly an employee who becomes disabled and is out of work must wait six months before applying for a waiver of premium.  

What the insurance company and the employer does in those six months will dictate whether the insured continues coverage under the policy, or the policy lapses.

Was Your Claim Denied Due to Lapse?

If the insured was disabled and out of work before dying and had employer-provided term insurance with a waiver of premium rider, but a beneficiary’s death benefit claim was denied due to lapse, it might be because the policy lapsed and was terminated improperly. It is common for either the employer or the life insurance company to mishandle or improperly deny the employee’s request for disability waiver of premium payments.

Employer Responsibility for Group Life Insurance Under ERISA

Employers frequently provide group life insurance for their employees as part of their benefit package. Often the group policy also covers the employee’s qualified dependents.

In some cases the employer will pay the premiums on behalf of employees. In others, the employer will pay the premium in part or not at all, and deduct that cost from the employees’ paychecks.

The amount of coverage the employee purchases is usually based upon a multiplier of the employee’s annual salary and will also depend upon whether the employee opts for any supplemental insurance, such as an AD&D (accidental death and dismemberment) rider.

Employers Have a Fiduciary Responsibility to Act in the Best Interests of Employees With Regard to the Group Life Insurance Policy

The employer, or the employer’s human resource department, is responsible for explaining the benefits and responsibilities of the employee under the group life insurance plan.

Unfortunately, employers often fail to provide employees with the policy itself, or with any information about what is a qualified loss and who is a qualified dependent, or even with the application they need to complete and submit to continue coverage under the plan should they become disabled and unable to work. 

In any of these cases, the employer is responsible for any lapse in coverage, and despite that lapse the beneficiary can be paid. For example, in a recent case, we got our client’s death benefit claim paid when the insured was out of work on short-term disability, and the insured’s employer failed to provide an application for waiver of premium or an application for conversion to an individual policy within the required 31-days. 

In another recent case, we got our client’s death benefit claim paid when the insured could not work due to battling colon cancer, and again, his employer failed to provide an application for waiver of premium or notice of the right to convert to an individual policy.

Insurance Company Responsibility under ERISA

The policy provision or rider pertaining to waiver of premium payments due to disability will define “totally disabled,” and every insurance company defines it differently. Usually, the definition takes some form of the following:

A person is “totally disabled” for the purpose of life insurance premium waiver if that person is unable to perform the duties of an occupation for which he or she is qualified by education, training, or experience, and that disability was caused by an injury or illness.

Often life insurance companies deny a premium waiver application and argue that the insured does not meet the definition of “totally disabled”. Then, if the premium is not waived and the insured fails to pay the premium, the policy lapses.

In these cases, we vigorously challenge that decision and argue that it should be reversed and the beneficiaries paid on their claims. We have been very successful in getting denial of disability premium waiver cases reversed and getting our clients paid. 

Insurance Companies Make Mistakes, Too

We have also been successful in getting our beneficiary clients paid where coverage lapsed because the life insurance company:

  • made an administrative error, 
  • mishandled the premium waiver application, or 
  • did not properly apply premium payments to the insured’s account, for example, when the insured had flexible or vanishing life insurance premiums.

We Get Beneficiaries Paid

The experienced life insurance beneficiary attorneys at Boonswang Law can help you find out if the employer or the insurance company was at fault for coverage lapse when the insured should have been eligible for waiver of premium for disability. Call us at 1-855-865-4335 or complete the online contact form, and we will discuss your case with you, free of charge.

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What Happens When Your Employer Terminates Your Group Life Insurance Policy?

What happens to life insurance when you leave a job? Does your employer end coverage when employment is terminated?

Not necessarily and not without notice. Read on to find out what your rights and responsibilities are regarding employer life insurance after retirement, or when you are fired, quit, or leave employment due to disability.

How Does Employee Group Life Insurance Work?

When an employer offers life insurance to their employees, they are required to meet certain standards laid out by The Employee Retirement Income Security Act of 1974 (also known as “ERISA”).  This is a federal law with which companies throughout the United States must comply.

Some of ERISA’s most basic functions include a requirement that participants are given information about their plan’s features and funding, the establishment of duties that the plan’s fiduciaries must uphold, and the ability for participants to seek remedies and access the federal courts if necessary.

According to the Bureau of Labor Statistics, 59% of non-government workers have access to employer-provided life insurance.

An employer may decide to stop offering coverage to their employees for a variety of reasons.  It is also possible that you may no longer be eligible for coverage if you leave your job.

In either situation, however, there are steps that your employer is required to follow under federal law once your group life insurance policy has been terminated.

What happens when an employee is terminated, under ERISA?

There are specific federal rules regarding what happens to group life insurance after leaving a job.

1. Employers Have To Notify You of Policy Changes

If an employer cancels the life insurance policy of an employee, the employee must be notified.  The courts impose additional duties on employers to notify the employee of their option to convert the group policy to an individual policy.

In the 8th Circuit (which is comprised of Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota), for example, the employer, as the “fiduciary”, must communicate material facts affecting the interests of beneficiaries regardless of whether the insured or beneficiary asks for that information.  Fink v. Dakotacare, 324 F.3d 685 (8th Cir. 2003).

Additionally, the fiduciary’s duty includes a duty not to misinform, as well as an affirmative duty to inform when they know that silence might be harmful.  Shea v. Esensten, 107 F.3d 625 (8th Cir. 1997).  This would require an employer to inform an employee of their option to convert their group life insurance policy to an individual policy.

2. You Have A Short Window of Time to Convert Insurance Coverage

After notifying you of your option to convert, there is a period of time in which the company must allow you to make the decision about whether you would like to convert your policy.

For example, the Insurance Department of Maryland notes that “the notice you receive states the deadline for making the selection of an individual policy. The insurance company must allow you at least 31 days after your group coverage ends in which to make a decision.”

If you decide to convert to an individual policy, you personally (not your employer) will be entering into a new contract with the insurance company.  Thus, it is important to keep in mind that you will become responsible for paying the premiums of your individual policy directly to the insurance company.

ERISA Claims Can Get Your Death Benefits Paid

In situations where an ERISA-related problem has occurred, do not delay in seeking our advice.  There is a short time-frame in which you may bring an ERISA claim, as well as certain other time requirements for notices of appeals and the like.

Even if years have passed since you have been denied your life insurance benefits, however, not all hope is lost.  By consulting our attorneys, we may uncover new information regarding your claim that essentially “resets the clock” on that time limit.

It is rather common for employers to fail to meet their duties to employees regarding their group life insurance policies.  The Boonswang Law Firm has vast experience in this area. For example, recently we got our client beneficiary paid when the insured was approved for long-term disability benefits, and employment was terminated. The employer failed to provide the notices required by ERISA and insurance lapsed. We had another no-notice case where the employer agreed that they failed to provide the required notice, and approved a posthumous enrollment application for life insurance. Our client was paid.

Did something like this happen in your case?  Let us find out. While we were successful in these particular ERISA cases and in many, many others, we cannot guarantee a similar result in any other matter.

Your Life Insurance Lawyers for ERISA Claims and Employer Life Insurance

Our lawyers at The Boonswang Law Firm have had a great deal of success in handling life insurance policies governed by ERISA.  We have had outstanding results in advocating for our clients against their former employers and life insurance companies.


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