Everything You Need to Know About ERISA Life Insurance Policies
Employers often offer group life insurance benefits to employees, allowing workers to purchase life insurance coverage at a discount. In most cases, the life insurance company pays benefits to the beneficiary named in the life insurance policy without issue. However, insurance companies are always looking to keep money in their own pockets and frequently deny life insurance benefits.
If you filed a claim with an ERISA life insurance policy, and the insurance company denied your claim, reach out to the Peace Law Firm. We understand that this is a very difficult time for you and your family, and the frustration that comes along with a denied ERISA life insurance claim only adds to the devastation confronting your family. Since the Peace Law Firm was founded in 2002, Attorney John Peace has effectively advocated on behalf of countless clients, helping them obtain the benefits they rightfully deserve. The Peace Law Firm handles Greenville ERISA life insurance cases on a contingency basis, meaning you will not need to pay for any legal fees or other case-related costs unless and until you obtain the benefits you are seeking.
What Is ERISA?
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal labor and tax law that sets certain minimum standards pertaining to private pension plans. Congress passed ERISA after noticing that employee-benefit laws varied widely across the United States. Some of these state laws conflicted with one another, adding to the confusion. Thus, by passing ERISA, Congress intended to create a uniform system of laws to allow for federal oversight of employee benefits plans.
ERISA covers a wide variety of employee benefit provisions, including health insurance plans, long- and short-term disability insurance plans, and life insurance policies. ERISA requires insurance companies that issue a qualifying plan to provide participants with certain information, including:
- Plan eligibility requirements;
- The amount of time it takes benefits to vest;
- The insurance company's fiduciary responsibility to the participant; and
- The appeals process, for when a claim is denied.
ERISA applies to all insurance plans issued by a private employer. However, the law generally does not cover those plans issued by government employers and churches. Similarly, ERISA does not cover plans purchased solely to comply with workers' compensation, unemployment, or disability laws.
If an employer provides insurance to an employee, it falls within ERISA. However, in some cases, an insurance plan that is not wholly paid for by the employer may still fall under ERISA. For example, courts have explained that ERISA applies to any plan that an employer "established or maintained." This includes situations in which:
- The employer pays part of the insurance premium;
- The employer urges employees to join the plan;
- The employer retains some of the withheld premiums to cover the costs of administering the plan;
- The employer tracks which employees belong to the plan; or
- The employer answers employees' questions about plan coverage.
Determining whether an insurance plan falls under the mandates of ERISA is not always straightforward. Those who have questions about an ERISA insurance plan should reach out to the dedicated South Carolina ERISA lawyers at the Peace Law Firm for immediate assistance.
ERISA Life Insurance Benefits
Life insurance is a type of insurance policy in which the insurance company agrees to pay out a certain amount of benefits to a designated beneficiary upon the death of the insured person. Typically, the insured party will make periodic payments to the insurance company, called premiums, and the policy is valid as long as the premiums are paid. Life insurance benefits can be crucial, especially when the insured party was a family's primary wage-earner. These benefits can replace the income the deceased party earned, allowing families to continue their standard of living after their loved one's passing.
Many employers choose to provide group life insurance coverage to their employees. While employers do not need to offer life insurance coverage—either at a discount or at no cost to the employee—if an employer chooses to offer life insurance, the policy must comply with ERISA.
Bringing an ERISA Life Insurance Claim
Employees who obtain life insurance through an employer-sponsored plan must know the plan's details. Insurance plans, especially life insurance policies, are incredibly complex legal contracts that contain many requirements to obtain benefits. Additionally, these plans provide for a number of exclusions, which are events that cause a claim to fall outside the plan's coverage. Thus, before the need to file a claim arises, it is imperative that the insured party—as well as their designated beneficiary—understand the terms of the policy, what is covered, what is not, and the process the beneficiary must follow to obtain benefits.
In the case of life insurance, the designated beneficiary or their attorney will be the party who must initiate the claims process. Life insurance policies provide different time limits within which a claim must be filed, so it is important to act quickly. Waiting too long can result in the denial of an otherwise valid claim.
Once the beneficiary files the claim, the insurance company will either approve or deny it. In some situations, the insurance company will ask for additional documentation. It is crucial to comply with all insurance company requests in a timely manner to maintain plan eligibility.
If the insurance company agrees to pay life insurance benefits, the process is over. However, frequently, the insurance company will deny the beneficiary's claim. If the insurance company denies an ERISA life insurance policy claim, the beneficiary has the legal right to file an appeal.
Why Are ERISA Life Insurance Claims Denied?
Insurance companies do not exist out of the goodness of their hearts; they are for-profit corporations that must take in more money than they pay out to stay in business. Thus, insurance companies look for any reason to deny a claim. Common reasons why an insurance company could deny benefits include:
- The insured employee retired;
- The insured employee was on sick leave at the time they died;
- The insured employee was not a full-time employee;
- The insured employee had not worked for a long enough time;
- The employer failed to pay the insurance premiums;
- The insured party left the company and did not convert the policy;
- The employer misrepresented the employee's information to the insurance company;
- The insured party left their job and did not continue coverage;
- The application contained errors; or
- There was an ERISA life insurance beneficiary designation conflict.
Regardless of the reason for denial, the dedicated South Carolina ERISA life insurance attorneys at the Peace Law Firm can help. We've been assisting life insurance beneficiaries through the claims and appeals process for nearly 20 years, during which we've successfully resolved countless claims for our clients.
What Happens If the Insurance Company Denied My ERISA Life Insurance Claim?
If an insurance company denies a claim for benefits, ERISA requires the company to provide you with certain information. This includes:
- The specific reason for denial;
- The provision of the insurance policy the company relied on to deny the claim; and
- Any additional information that the insurance company needs to reconsider its decision.
Once the insurance company denies a claim, you have 180 days to file an administrative appeal. If you timely file your appeal, the insurance company then has 90 days to respond. However, it is common for the insurance company to request additional time, usually in 30-day increments. Importantly, beneficiaries can challenge an insurance company's request for an extension if they believe the insurance company is delaying the proceedings.
Your attorney can present additional evidence during an administrative appeal that was not considered during the initial claim. This includes expert reports, non-presented medical records, and letters from doctors pertaining to the insured party's death.
If your administrative appeal is denied, you then have the right to file a lawsuit against the insurance company, asking the court to compel the company to pay out on the claim. However, this is a very complex process, and many beneficiaries find that retaining an experienced South Carolina ERISA life insurance attorney makes the process much easier. An attorney who is familiar with the process can also ensure that your administrative appeal complies with all federal regulations, increasing the chances of success.
Was Your ERISA Life Insurance Claim Denied by the Insurance Company?
If you recently received the news that an insurance company denied your life insurance claim, reach out to the Peace Law Firm for immediate assistance. At the Peace Law Firm, we have extensive experience handling even the most complex and contested ERISA life insurance claims. We know what it takes to get you the benefits your loved one worked so hard to maintain. Our South Carolina ERISA lawyers handle all cases on a contingency basis, meaning you will not need to pay upfront to bring your claim. To learn more and to schedule a free consultation to speak with an attorney, give the Peace Law Firm a call. You can also connect with us through our online form, and we will reach out to you.