Can Employer-Provided Life Insurance Be Denied? What You Need to Know
Employer-provided life insurance can be a convenient and cost-effective way to obtain coverage, but it’s not always as straightforward or secure as many workers believe. Unfortunately, a significant number of families only learn about the limitations of these policies after a loved one has passed—and by then, it’s often too late to fix paperwork issues or eligibility problems. In many cases, life insurance benefits through work are denied unexpectedly, leaving beneficiaries without the financial support they were counting on. If your claim has been denied, it may not be the final word.
How employer-provided life insurance works
Many companies offer life insurance as part of a group benefits package. This group coverage is usually underwritten by a third-party insurer and offered to eligible employees at discounted group rates. In most cases, employees aren’t required to undergo a medical exam, and premiums are automatically deducted from payroll, making participation simple and accessible.
Coverage amounts vary, but are often tied to a multiple of the employee’s salary—such as one or two times their annual earnings. Some plans allow employees to purchase additional optional coverage for themselves or their dependents.
The major appeal of employer-sponsored life insurance lies in:
Convenient enrollment
Low or no-cost basic coverage
Group rates with minimal underwriting
Automatic premium payments
For many workers, it seems like an easy way to protect their families. But this convenience can come with serious limitations, especially if the employee leaves the company, becomes disabled, or fails to convert the policy to an individual plan.
Common pitfalls and policy lapses
One of the most important things to understand is that employer-provided life insurance only remains in effect while the employee remains eligible. That often means full-time employment status must be maintained. If the employee resigns, retires, is terminated, or becomes disabled, their group life coverage may end—sometimes without them realizing it.
In many cases, employees are given the opportunity to convert their group coverage to an individual policy when they leave the company. But this window of opportunity is usually short (e.g., 30 or 60 days), and if it’s missed, coverage may be lost permanently. We have worked with many families who didn’t know that conversion paperwork was never submitted—and their claim was denied as a result.
This is especially heartbreaking when:
The employee was too sick to manage paperwork
The employer failed to provide proper conversion instructions
Premium deductions were stopped without warning
The employee believed they were still covered based on prior benefits materials
When employer-provided life insurance claims are denied
Unfortunately, denials of group life insurance claims are more common than most people realize. Insurers may deny a claim for reasons such as:
The employee wasn’t actively employed or working full-time at the time of death
The policy was never converted after employment ended
Premiums weren’t paid (due to unpaid leave, disability, or clerical error)
The cause of death was excluded under the policy (e.g., suicide within two years)
The beneficiary designation was not valid or was challenged by another party
In some cases, employers themselves make errors—such as failing to enroll the employee properly, withholding premiums without submitting them to the insurer, or giving the employee incorrect information about their benefits. When this happens, the insurer may deny the claim, claiming that the policy was never “in force.”
This can leave grieving families feeling betrayed and helpless—but you don’t have to accept a denial at face value.
You may have legal options—even after a denial
If your loved one had life insurance through work and your claim was denied, it’s important to know that you have rights under the law. Group life insurance policies offered as employee benefits are typically governed by ERISA (Employee Retirement Income Security Act)—a federal law that sets standards for how these plans must be managed and how claims must be reviewed.
Under ERISA:
You have the right to receive a detailed explanation of the denial
You are entitled to appeal the decision internally
You may file a lawsuit in federal court if the appeal is denied
Insurers must act in the best interests of the policyholder and beneficiaries
An experienced life insurance attorney can review the circumstances of the denial and identify whether the employer, insurer, or plan administrator failed to meet their obligations. In many cases, we’ve been able to overturn denials caused by clerical mistakes, conversion misunderstandings, and employer negligence.
How to protect your coverage if you rely on employer-provided life insurance
Whether you’re currently employed or thinking about your family’s long-term needs, there are several steps you can take to avoid problems with group life insurance:
Get a copy of your life insurance plan document and certificate of coverage
Understand what events can terminate or reduce your coverage
Make sure your beneficiary designation is clear and up-to-date
Ask about your right to convert the policy if your job changes
Keep documentation of all enrollment forms, premium deductions, and correspondence
Most importantly, don’t rely solely on employer-provided life insurance if you can afford an individual policy. Because coverage through work often ends when you leave, supplementing with a private policy can give your family better long-term protection.
We help families fight denied employer-sponsored life insurance claims
If you’ve recently lost a loved one and your group life insurance claim was denied, don’t assume the insurer’s decision is final. Our firm specializes in life insurance claim denials, including ERISA-governed group policies, and we’ve successfully overturned many claims that were wrongly rejected.
We understand how to navigate the legal and administrative complexities involved and can step in to protect your rights at every stage—from appeal to litigation. We offer free consultations, and you don’t pay any legal fees unless we recover money for you.
FAQ: Employer-Provided Life Insurance and Denied Claims
Can an employer cancel a life insurance policy after someone dies?
They can’t cancel it retroactively, but they can argue that the policy lapsed or was never in force due to ineligibility, missed conversion deadlines, or nonpayment.
What if the employee was no longer working when they died?
Coverage often ends at termination, but if the employee died within a grace period—or was misinformed about conversion options—you may still have a valid claim.
Can you appeal a denied group life insurance claim?
Yes. Under ERISA, you are entitled to a full internal appeal, and if denied again, you can file a lawsuit in federal court.
Does disability affect employer-provided life insurance?
It can. Some policies offer a waiver of premium for disabled employees—but only if the waiver is properly requested and approved. This is a common source of wrongful denials.
How long do I have to appeal a denied claim?
Typically 60–180 days after the denial, but deadlines can vary by policy. You should speak with an attorney as soon as possible to preserve your rights.