Group Life Insurance Lawsuit Dismissed Where Deceased Lost Coverage Due to Lay Off Before Their Death
A New York federal court dismissed a life insurance lawsuit where the insurance was obtained through an employer group, but the deceased was laid off and lost the coverage 3 months before he died. The lawsuit was filed by Farone and Son Funeral Home, because the survivor who was the beneficiary of the life insurance policy, Gregory DeLee, had assigned the benefits of the policy to Farone to pay for the funeral of the deceased. Farone was likly not aware that the deceased had been laid off.
DeLee had filed a life insurance claim before the lawsuit, but Guardian Life Insurance Company denied the claim, citing to policy provisions that supported its decision in a denial letter. After assigned the rights to Farone and Son Funeral Home, Farone filed the lawsuit to recovery the life insurance benefits.
Unfortunately for the funeral home, when someone has a group life insurance claim through their employer, to keep the life insurance coverage in force, they usually have to remain employed. Once they are not an active employee, they usually have to convert the policy to an individual policy and pay a premium to keep the coverage. If they are disabled, they may be able to keep the group coverage under something called a life insurance premium waiver, but they have to apply for that.
In this case, the deceased was laid off 3 months before their death. There is no mention in the case that they tried to convert the policy to an individual life insurance policy or seek a disability premium waiver, so they were left with no life insurance coverage. The case was dismissed, because they lost their coverage when they were laid off.
Farone and Son Funeral Home, Inc. v. Guardian Life Insurance Company of America, #8:15-cv-0679 (GTS/DEP), 2016 WL 2354264 (N.D. NY 5/4/2016).
TAKEAWAY: If you or a loved one loses their job, look into whether any life insurance coverage can be converted to an individual policy. If the job loss was due to disability, look into whether the life insurance policy has a premium waiver that allows you to keep the life insurance for free due to disability.
If you have a life insurance claim that has been denied, call ERISA Life Insurance Attorney John V. Tucker for a free consultation at (866) 282-5260.