Who’s at Risk of Employer-Provided Life Insurance Claim Denials?
Many employees count on employer-provided life insurance as a convenient and affordable way to protect their families. But when tragedy strikes and a claim is filed, beneficiaries are sometimes shocked to learn the coverage was not actually in force—or that the insurer is denying the claim due to technicalities buried in the fine print. Employer life insurance claims are frequently denied for reasons policyholders and their families never anticipated.
Life insurance through work often seems like a win. It’s cheaper, easier to manage, and sometimes even fully paid by the employer. However, these policies are also bound by strict eligibility criteria that can become stumbling blocks when it matters most. Unlike private life insurance you buy yourself, employer-sponsored coverage is subject to the rules of the company and, in most cases, the federal ERISA law. That means both more regulation and more complexity when something goes wrong.
Understanding Employer Life Insurance Policies
Employer life insurance typically falls under one of two categories: basic group life insurance, usually provided at no cost to the employee, and supplemental life insurance, which the employee can elect and pay for through payroll deductions. Federal employees may be covered by a plan called FEGLI (Federal Employees Group Life Insurance), while private-sector employees may have plans offered by large insurers like MetLife, Prudential, or Cigna through their employer.
The appeal is clear—automatic enrollment, low premiums, and no need for a medical exam. But beneath the surface, group life insurance policies often contain eligibility restrictions, employment-based limitations, and lapse risks that beneficiaries are unaware of until a denial notice arrives.
Common Reasons for Denied Group Life Insurance Claims
The most frequent reason a claim gets denied is that the coverage was never actually in effect. Sometimes, the employee was no longer eligible at the time of death—due to retirement, job termination, switching to part-time, or taking unpaid leave. Other times, supplemental coverage was never properly activated or lapsed due to missed payroll deductions.
Here are examples of situations that often result in denial:
The deceased employee was no longer actively employed or was on unpaid leave at the time of death
Coverage was contingent on working full-time, but hours were reduced before the claim
Supplemental life insurance was never confirmed or the premiums were not deducted
The employee had retired and assumed coverage continued, when in fact it had lapsed
A conversion or portability option existed but was not exercised within the required timeframe
These scenarios are all too common—and many families don’t realize they have legal recourse.
Challenging Denials and Understanding Your Rights
Under ERISA, beneficiaries have the right to request the plan documents, including the summary plan description (SPD), and to file an administrative appeal if a claim is denied. But this process can be complex, especially when an insurer cites ambiguous policy terms or misrepresents eligibility requirements.
What many don’t realize is that employers and insurers can make mistakes. They might have failed to provide proper notices or miscommunicated coverage options. In some cases, courts have found that employers waived certain requirements by accepting late forms or allowing coverage to continue after job status changes. These details can make or break a case—and they require an experienced life insurance attorney to uncover.
If your loved one had group life insurance through work and the claim was denied, you need more than a denial letter—you need answers. Was the deceased really ineligible? Were premium payments properly handled? Were proper notices given about conversion rights? The answers often tell a different story than what the insurance company claims.
If Your Claim Was Denied, You’re Not Alone
We’ve seen countless families blindsided by denials after losing a loved one. The good news is that these denials are often not final. With the right legal strategy, many can be reversed—sometimes even without litigation. Our attorneys specialize in group life insurance claims, including those governed by ERISA and FEGLI, and we know how to uncover errors that lead to reversals.
Don’t let a technicality prevent your family from receiving what they’re owed. If your claim has been denied, reach out to our office today. We will review your case at no cost and let you know your options.
FAQ: Employer Life Insurance Claim Denials
What is the most common reason an employer life insurance claim is denied?
The most common reason is that the employee was no longer eligible under the plan—such as no longer being employed, being part-time, or being on leave—at the time of death.
Can I still get the payout if the insurance was supposed to be converted after employment ended?
Possibly. If the employer failed to provide proper notice about your right to convert or continue the policy, a court may still enforce the coverage.
Does ERISA help or hurt my claim?
ERISA creates both protections and challenges. It gives beneficiaries rights to appeal and sue in federal court but also limits the kind of damages that can be recovered. It’s critical to have legal help when navigating ERISA claims.
What if premiums were not deducted from paychecks correctly?
If the employer or insurer mishandled payroll deductions, coverage might still be enforced depending on the circumstances. These types of administrative errors are common grounds for a successful appeal.
Can I fight a FEGLI denial?
Yes. Although FEGLI is a federal program, you still have appeal rights. But strict deadlines and technical rules apply—legal assistance is highly recommended.