United of Omaha Life settlement reached by DOL to reform proof of insurability

The US Division of Labor has reached a settlement with United of Omaha Life Insurance coverage mandating the corporate to switch its administration of the requirement for individuals in employer-sponsored life insurance coverage to current proof of excellent well being – often known as proof of insurability – earlier than acquiring protection below sure circumstances.

Following an investigation by the division’s Worker Advantages Safety Administration (EBSA), it was revealed that United regularly accepted premiums for prolonged intervals with out confirming whether or not insurability necessities have been met. This follow misled individuals and their beneficiaries into believing they’d protection.

Subsequently, when a participant handed away, United usually rejected claims for advantages, stating they by no means obtained proof of insurability, thus leaving beneficiaries with out the life insurance coverage advantages for which their family members had paid.

United knowledgeable the division that it voluntarily reassessed claims courting again to February 2018, rectifying claims that have been denied solely attributable to a participant’s failure to offer proof of insurability.

EBSA’s inquiry centered on the administration of life insurance coverage by United that fall below the Worker Retirement Revenue Safety Act of 1974. The investigation discovered quite a few cases the place the corporate denied claims attributable to a participant’s failure to offer proof of insurability.

Brokered by the division’s Workplace of the Solicitor, the settlement stipulates that United has 90 days from receipt of a participant’s preliminary premium fee to find out if the participant has fulfilled any related proof of insurability conditions. As soon as this 90-day interval lapses, the corporate is barred from denying a declare for all times insurance coverage advantages primarily based on proof of insurability. These provisions additionally prolong to United’s guardian firm, Mutual of Omaha Insurance coverage, and its subsidiary, Companion Life Insurance coverage.

“This horrible follow denied grieving households life insurance coverage advantages for which their family members had paid, in some instances, for a few years,” Labor Division solicitor Seema Nanda mentioned. “This settlement with United of Omaha Life Insurance coverage ensures that beneficiaries should not harmed by the corporate’s failure to confirm, on a well timed foundation, that premium-paying individuals have glad relevant proof of insurability necessities. All insurers ought to study their practices to stop related conduct.”

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