When an Employer-Sponsored Life Insurance Policy Denies a Claim After Years of Premiums: Recent Trends and Your Legal Remedies
Employer-sponsored life insurance is supposed to offer peace of mind. Employees trust that when they enroll in group life insurance coverage through work, pay premiums for years, and faithfully comply with employer requirements, their loved ones will receive the promised benefit when they pass away.
But in recent years, a disturbing trend has emerged: life insurance companies deny claims on employer-sponsored policies—even after accepting premiums for years. Many families discover only after a death that the coverage was deemed “invalid” because the insurer claims the employee never submitted proof of insurability or never “qualified” for supplemental life coverage.
This type of group life insurance denial has triggered federal investigations, lawsuits, and new regulatory guidance—but insurers continue using the tactic to avoid paying millions in claims.
In this blog, we break down:
Why employer-sponsored life insurance claims are being denied
The role of proof of insurability
What recent investigations reveal (Unum, Prudential, Mutual of Omaha, and others)
What beneficiaries can do when a life insurance company denies a claim after years of premiums
How ERISA protects your rights
When to get legal help
If your loved one’s employer-sponsored life insurance claim was denied, Kadetskaya Law Firm LLC can help. Call (888) 510-2212 for a free consultation.
1. Why Employer-Sponsored Life Insurance Claims Are Being Denied
Employer life insurance policies generally come in two types:
Basic coverage — automatic, employer-paid
Supplemental coverage (voluntary life insurance) — employee-paid
The problem typically arises with the supplemental coverage. Employees sign up through HR, premiums are deducted from their paycheck, but the insurer later claims:
“The employee never submitted required proof of insurability, therefore the supplemental coverage was never effective.”
This becomes the basis for a post-claim underwriting denial, meaning the insurer only evaluates eligibility after a death occurs.
The pattern is the same nationwide:
Insurer accepts premiums for months or years
Employee believes they have full coverage
After death, insurer checks the file
Insurer denies the claim for “lack of evidence of insurability”
Refunds premiums instead of paying the benefit
Families are shocked—and legally, these denials are often improper.
2. The Proof of Insurability Trap
“Proof of insurability” (POI) is a medical questionnaire or health statement required for supplemental coverage. Problems happen when:
The employer never provides the form
HR departments forget to collect it
Employees believe they are covered because premiums are deducted
Insurers don’t check the form until after the claim
Systems fail to flag missing paperwork
The employee is left in the dark—and beneficiaries are left with a denial.
But under ERISA, this practice is often illegal.
If the insurer (or employer) accepted premiums and confirmed coverage, it cannot typically rely on a technicality years later to avoid paying.
3. Federal Investigations Reveal Widespread Abuse
Recent U.S. Department of Labor (DOL) investigations have exposed systemic wrongdoing by major insurers.
Unum Investigation (2023–2024)
The DOL found that Unum:
Accepted premiums for supplemental life insurance
Never requested proof of insurability
Denied claims years later using the missing paperwork
Violated ERISA by failing to administer claims fairly
Unum was forced to pay previously denied claims and change company practices.
Prudential Investigation (2022–2023)
Similar findings hit Prudential:
The company retroactively invalidated coverage
Claimed policies “never went into force”
Denied claims even when premiums were collected
Refunded premiums instead of paying death benefits
The DOL called these denials “wrong, harmful, and inconsistent with ERISA.”
Prudential was required to:
Rewrite internal procedures
Pay certain denied claims
Stop post-claim underwriting
Mutual of Omaha, Lincoln National, and Other Carriers Also Investigated
These insurers were found engaging in similar conduct—denying group life insurance claims after years of premiums due to alleged lack of insurability forms.
The federal government’s position is now clear:
If an insurer takes premiums, the coverage is active. They cannot void a policy after a death just because paperwork was missing.
4. When Insurers Wrongfully Deny Employer-Sponsored Life Insurance Claims
Insurers use several common tactics:
1. Claiming “coverage never went into effect”
This is the most common denial. Beneficiaries are told the deceased “was never approved,” even though premiums were deducted for years.
2. Blaming HR or the employer
Insurers shift responsibility, alleging:
The employer didn't send forms
The employer didn’t confirm eligibility
The employer “mistakenly” enrolled the person
3. Post-claim underwriting
Insurers accept premiums without reviewing insurability and only verify eligibility once a claim is filed.
4. Saying the employee was “not actively at work”
Used in disability or serious illness situations—even when premiums were paid.
5. Citing plan language beneficiaries never saw
ERISA requires clear disclosure. Hidden requirements cannot justify a denial.
6. Offering a refund of premiums instead of paying the death benefit
This is a classic tactic to avoid liability.
5. Why These Denials Are Often Illegal Under ERISA
Employer-sponsored life insurance policies are governed by ERISA, a federal law that requires:
Fair and consistent claim handling
Full and fair review
Clear and timely communication of rights
Enforcement of coverage when premiums are accepted
Under ERISA:
✔ If premiums were accepted, coverage is generally active.
✔ If the insurer failed to request proof of insurability while the employee was alive, it cannot deny a claim later.
✔ Insurers must follow their own plan procedures—and many do not.
✔ Ambiguities are interpreted in favor of the beneficiary, not the insurer.
Insurers violating ERISA can be forced to:
Pay the full policy amount
Pay attorneys’ fees
Fix flawed practices
Reverse systemic denials
6. What Beneficiaries Should Do If a Group Life Insurance Claim Was Denied
If you received a denial letter, take these steps immediately:
1. Request the complete claim file
Under ERISA, you are entitled to:
Enrollment forms
HR communications
Internal insurer notes
Emails between insurer and employer
Proof of insurability documentation
Premium payment history
Medical underwriting decisions
This evidence often contains mistakes.
2. Compare payroll deductions to coverage documents
If premiums were deducted, it's strong evidence coverage was accepted.
3. Analyze whether EOI (Evidence of Insurability) was ever requested
If the insurer never asked for proof of insurability, the denial is likely improper.
4. Check whether the employer misrepresented coverage
HR errors do NOT eliminate coverage under ERISA.
5. Consult a life insurance attorney experienced in ERISA
These cases are complex, and insurers fight hard to avoid accountability.
Kadetskaya Law Firm LLC routinely overturns these denials through:
ERISA administrative appeals
Targeted legal arguments
Litigation in federal court
Regulatory complaints
Negotiated settlements
7. Why You Should Not Appeal Alone
ERISA appeals are not like standard insurance appeals. They are:
Strict
Technical
Evidence-driven
Time-sensitive
Legally complex
You typically have 60 days to file an administrative appeal—but the argument must be airtight because:
Whatever is not included in the ERISA appeal cannot be used in later litigation.
This is why representation matters. A strong ERISA attorney:
Obtains missing documents
Identifies procedural violations
Challenges unlawful claim practices
Builds a complete administrative record
Forces insurers to follow federal law
8. Legal Remedies for Wrongfully Denied Employer-Sponsored Life Insurance Claims
If your claim was denied, you may be entitled to:
✔ Full policy benefit
✔ Interest
✔ Attorneys’ fees
✔ Litigation in federal court
✔ Penalties for withheld documents
✔ Reversal of appeal denials
We have successfully recovered benefits in cases where insurers claimed:
No proof of insurability
No active employment
No enrollment
No evidence of approval
No confirmation from HR
No medical underwriting
“Coverage never went into effect”
Most of these claims were completely valid.
Call Us for a Free Consultation
If your loved one’s employer-sponsored life insurance claim was denied after years of premiums, do not accept the denial. These cases often involve violations of federal law, and beneficiaries have powerful rights under ERISA.
📞 Call Kadetskaya Law Firm LLC at (888) 510-2212 for a free consultation.
We will review the denial, examine the records, and help you fight for the benefits your family is legally owed.
