The agreement prohibits denials for lack of proof of insurability after 90 days of premiums paid
WASHINGTON – the US Department of Labor announced today agreement with United of Omaha Life Insurance Co. which requires the company to review how it administers its requirement that participants in employer-sponsored life insurance plans provide proof of good health — called proof of insurability — before receiving coverage in certain cases.
Investigation of The department’s Employee Benefit Security Administration found that United often accepted premiums for years without determining whether insurance requirements were met, leading participants and their beneficiaries to believe they had coverage. After a participant dies, United often denies benefit claims on the grounds that the company never received the participant’s proof of insurance, leaving their beneficiaries without the life insurance benefits their loved one paid for.
EBSA’s investigation focused on how United administered life insurance plans covered by the Employee Retirement Income Security Act of 1974. The investigation found that the company denied numerous claims based on a participant’s failure to provide evidence for insurance.
The settlement, reached by the Department Counsel’s Office, gives United 90 days after receipt of a participant’s first premium payment to determine whether the participant has met all applicable proof of insurance requirements. After the 90-day period, the company cannot deny a claim for life insurance benefits for reasons related to proof of insurability. These requirements also apply to United’s parent company — Mutual of Omaha Insurance Co. — and United’s subsidiary, Companion Life Insurance Co.
“This appalling practice deprived grieving families of life insurance benefits that their loved ones had been paying for, in some cases, for many years,” explained labor lawyer Seema Nanda. “This agreement with United of Omaha Life Insurance ensures that beneficiaries will not be harmed by the company’s failure to promptly verify that premium paying participants have completed the applicable proof of insurance requirements.” All insurers should examine their practices to prevent such behavior.
The Department’s agreement with United follows a such agreement she achieved with Prudential Insurance Co. in April 2023. Investigations into the evidence-of-insurance practices of other life insurance companies are ongoing.
“Workers who pay life insurance premiums need to feel confident that their beneficiaries will receive the benefits that their life insurance company paid for,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez. “The Employees’ Income Security Administration will take appropriate action against insurance companies that collect regular premium payments from plan participants without first ensuring that participants have met eligibility requirements as insurance, and later cite those requirements, to deny benefits after the participant dies.”
United notified the department that it voluntarily reworked claims dating back to February 2018 to provide benefits for claims denied solely based on a participant’s failure to provide evidence of insurability.
EBSA’s Kansas City office conducted the investigation, and attorneys Jeff Hahn, Christine Hahn, Sarah Holtz and Jamie Bowers negotiated the settlement for the department.
Read the United of Omaha Life Insurance Co. Agreement.