The U.S. Division of Labor Friday introduced a settlement with United of Omaha Life Insurance coverage Co. that requires the corporate to revise the way it administers its requirement that individuals in employer-sponsored life insurance policy present proof of excellent well being — known as proof of insurability — earlier than acquiring protection in sure situations.
An investigation by the division’s Worker Advantages Safety Administration discovered United typically accepted premiums for years with out figuring out if insurability necessities had been happy, inflicting individuals and their beneficiaries to consider they’d protection. After the participant died, United would then typically deny claims for advantages on the grounds the corporate by no means obtained the participant’s proof of insurability, leaving their beneficiaries with out life insurance coverage advantages for which their liked one had paid.
EBSA’s investigation targeted on how United administered life insurance policy coated by the Worker Retirement Earnings Safety Act of 1974. The investigation discovered that the corporate has denied quite a few claims primarily based on a participant’s failure to have supplied proof of insurability.
The settlement reached by the division’s Workplace of the Solicitor offers United 90 days after it receives a participant’s first premium fee to find out whether or not the participant has happy any relevant proof of insurability necessities. After the 90-day interval expires, the corporate can’t deny a declare for all times insurance coverage advantages for causes associated to proof of insurability. These necessities additionally apply to United’s dad or mum firm — Mutual of Omaha Insurance coverage Co. — and United’s subsidiary, Companion Life Insurance coverage Co.
“This horrible apply denied grieving households life insurance coverage advantages for which their family members had paid, in some circumstances, for a few years,” defined Solicitor of Labor Seema Nanda. “This settlement with United of Omaha Life Insurance coverage ensures that beneficiaries aren’t harmed by the corporate’s failure to confirm, on a well timed foundation, that premium-paying individuals have happy relevant proof of insurability necessities. All insurers ought to study their practices to stop comparable conduct.”
The division’s settlement with United follows an analogous settlement it reached with Prudential Insurance coverage Co. in April 2023. Investigations into different life insurance coverage firms’ practices surrounding proof of insurability are ongoing.
“Staff who pay life insurance coverage premiums ought to really feel safe that their beneficiaries will obtain the advantages for which their life insurance coverage firm was paid,” mentioned Assistant Secretary for Worker Advantages Safety Lisa M. Gomez. “The Worker Advantages Safety Administration will take acceptable motion in opposition to insurance coverage firms that accumulate common premium funds from plan individuals with out guaranteeing up entrance that individuals have happy eligibility necessities like insurability, and later cite these necessities to disclaim advantages after the participant passes away.”
United has suggested the division that it has voluntarily reprocessed claims relationship again to February 2018 to supply advantages for claims denied primarily based solely on a participant’s failure to supply proof of insurability.
EBSA’s Kansas Metropolis Workplace performed the investigation, and attorneys Jeff Hahn, Christine Han, Sarah Holz, and Jamie Bowers negotiated the settlement for the division.