Denied Life Insurance Claims: Understanding the Differences Between ERISA and FEGLI
Denied life insurance claims can be devastating, especially when the policyholder was counting on the benefit to protect their loved ones. But not all policies are the same, and one of the most important distinctions is whether the claim is governed by ERISA or FEGLI. These two systems operate under entirely different legal frameworks, and understanding the differences can determine how a claim is contested, appealed, or litigated.
What’s the difference between ERISA and FEGLI life insurance claims?
ERISA life insurance claims are tied to private employer-provided policies and governed by federal law under the Employee Retirement Income Security Act (ERISA). FEGLI claims, on the other hand, involve federal government employees and are regulated by the Federal Employees’ Group Life Insurance Act (FEGLIA). The main differences between the two lie in the administrative process, available legal remedies, and limitations on appealing denied claims.
Why some life insurance claims are denied under both systems
Regardless of whether a life insurance policy is covered by ERISA or FEGLI, insurers often deny claims for similar reasons. These include allegations of material misrepresentation, missed premium payments, disputes over beneficiary designations, or the policy being considered inactive at the time of death. However, how these issues are handled depends significantly on the type of policy.
Under ERISA, claimants are often required to exhaust internal appeals before they can sue, and litigation is restricted to federal court. Remedies are limited—typically only the policy’s face value and possibly attorney’s fees. Emotional distress damages or punitive damages are not available under ERISA.
FEGLI claims also face strict rules, but appeals go through the Office of Personnel Management (OPM) rather than a private insurer. Once the administrative review concludes, court challenges are limited and often deferred to the OPM’s interpretation of regulations. This can make it particularly difficult to challenge wrongful denials.
ERISA life insurance: complex procedural hurdles and limited recourse
Private-sector employees often receive group life insurance through their employer. These group policies are usually subject to ERISA, which imposes specific rules for claims handling and appeals. When a claim is denied, the beneficiary must usually complete an internal appeals process within 60 or 180 days before filing a lawsuit.
ERISA litigation is governed by strict standards. Courts give deference to the insurance company’s decision unless it was arbitrary and capricious. That means even a questionable denial can be upheld if it was not blatantly unreasonable. There is no jury trial, no punitive damages, and no compensation for pain and suffering—only the actual benefits owed and possibly legal fees.
Documentation is key in these cases. Once a lawsuit is filed, the court generally only considers the administrative record—the documents and correspondence generated during the claim and appeal process. That’s why hiring a life insurance attorney early is critical under ERISA. Without a strong administrative record, it’s nearly impossible to win in court.
FEGLI life insurance: federal control and bureaucratic appeals
FEGLI covers millions of federal workers and is administered by the Office of Federal Employees’ Group Life Insurance (OFEGLI) in coordination with MetLife. When a FEGLI claim is denied, the appeal doesn’t go to a traditional insurance company—it’s reviewed by the OPM.
This administrative framework makes FEGLI claims highly bureaucratic. Beneficiaries must follow OPM’s procedures precisely and respond within specific deadlines. Once a final decision is issued, options for further review are narrow. Judicial review of FEGLI decisions is limited, and courts often defer heavily to the OPM’s judgment.
For example, if a federal employee mistakenly named an ex-spouse as beneficiary after divorce and didn’t update the designation, the claim may still go to the ex-spouse unless state automatic revocation statutes apply and don’t conflict with FEGLIA’s preemption of state law. These legal nuances often require a federal life insurance attorney experienced in FEGLI matters.
Preemption issues and conflicting laws
One of the most important distinctions between ERISA and FEGLI is how they handle conflicts between federal and state law. ERISA preempts many state insurance laws, meaning state-level protections—such as those requiring notification of a lapse—may not apply. Similarly, FEGLI preempts state community property laws or revocation-on-divorce statutes in some cases, which can lead to controversial results, such as a new spouse being denied benefits in favor of an outdated beneficiary.
This makes both ERISA and FEGLI cases particularly tricky when it comes to disputed beneficiary designations. In fact, interpleader lawsuits—where the insurance company pays the benefit into court to let potential beneficiaries fight it out—are common in both systems. A skilled attorney can help rightful beneficiaries make the best case for entitlement to the proceeds.
Common denial scenarios under ERISA and FEGLI
Some scenarios play out frequently under both systems. Examples include:
The policyholder’s employer failed to submit proper enrollment paperwork or premium payments, and the insurer claims the policy was never in force.
The insured switched jobs and assumed coverage continued, only for the family to discover after death that no policy was active.
A divorce occurred, but the beneficiary was never updated, leading to disputes between a former spouse and the current family.
The insured’s health history was allegedly misrepresented, and the insurer claims material misrepresentation—even for minor or unintentional omissions.
Under ERISA, beneficiaries have limited discovery tools and a narrow litigation path to fight back. Under FEGLI, beneficiaries must navigate OPM's review procedures, and success often hinges on compliance with technical federal regulations. In either case, legal guidance is crucial.
Legal representation matters
Whether the life insurance policy falls under ERISA or FEGLI, wrongful claim denials are not uncommon. Insurers and federal administrators rely on strict interpretation of rules and often deny benefits on technical grounds. These claims are especially stressful for grieving families who expect the life insurance payout to be straightforward.
Legal representation can make a decisive difference. Attorneys experienced in ERISA claims know how to build a strong administrative record and challenge denials in federal court. FEGLI attorneys understand how to navigate OPM procedures, raise legal challenges involving preemption, and advocate for claimants who are wrongly denied.
If you’ve had a life insurance claim denied—whether under ERISA or FEGLI—don’t assume there’s nothing you can do. Contacting a life insurance lawyer early in the process may preserve your rights and improve your chance of success.
FAQ: ERISA vs. FEGLI Life Insurance Claim Denials
Can I sue if my ERISA life insurance claim is denied? Yes, but you must first exhaust the insurer’s internal appeal process. Lawsuits must be filed in federal court, and only the administrative record is considered.
Can I sue over a denied FEGLI claim? You can challenge a final decision by the OPM, but courts often defer to the agency’s interpretation. Legal options are more limited than with private plans.
What if the beneficiary designation is outdated? Under ERISA, the plan documents usually control. Under FEGLI, the most recent signed designation governs, even if it names an ex-spouse, due to federal preemption of state laws.
Can I recover emotional damages in an ERISA or FEGLI case? No. Neither system allows compensation for emotional distress or punitive damages. You can only recover the benefit amount and possibly attorney’s fees under ERISA.
Is there a time limit to appeal a denied claim? Yes. ERISA plans generally require appeals within 60–180 days. FEGLI appeals must follow OPM deadlines. Missing these can end your right to fight the denial.