Gotcha! DOL Settles with Insurer Over Denied Life Insurance Claims

We buy life insurance to protect our beneficiaries. With employee benefits, automatic payroll deduction makes the selection of group life insurance an easy annual election—then we can feel protected. Sometimes employers offer minimum coverage (maybe one-times base pay) without evidence of insurability (EOI) being required, but often it’s required for all or a portion of the coverage over the minimum. The U.S. Department of Labor investigated and recently settled with an insurer where the beneficiaries of a number of deceased employees had routinely been denied death benefits, told by the insurer that there was a flaw in the policy coverage—the EOI never having been provided.  While it wasn’t clear whether the insurer or the employer needed to administer actually gathering the EOI, the DOL concluded that the insurer couldn’t reverse coverage on lack of EOI where it nonetheless routinely accepted the premium payments.

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