Employers should be mindful of their responsibility to advise employees about group life insurance policy details. Several recent court cases have been brought against employers regarding denied claims due to improper communication. In some cases, employers were required to pay the full life insurance benefit out of company funds. Even if an employer ultimately wins in court, avoiding litigation is preferable.
So, how does an employer avoid becoming a litigant on a group life insurance case? Whether the coverage is paid by the employer or the employee, there are important steps to follow:
- Distribute Summary Plan Descriptions (SPDs), such as the carrier Certificates of Coverage, within 90 days of enrollment (per ERISA)
- When Evidence of Insurability (EOI) is required:
- Review the EOI process with the employee
- Advise the employee that coverage is not effective unless/until approved by the carrier
- Do not take payroll deductions for amounts over the guaranteed issue amount until/unless approved by the carrier
- When coverage is canceled or reduced for any reason:
- Stop or reduce any payroll deductions for premium
- Upon request or as appropriate, provide timely notices about conversion, portability, or accelerated benefits that are included in your contract
- Review life waiver of premium provisions for disabled employees, if included in your contract
- Do not make coverage promises without consulting your plan documents or your Keller/OneDigital account team
If you have any questions regarding your group life insurance contracts, please contact your Keller/OneDigital account team.