By Peter Casciano, Esq.
Related to the long-term and short-term disability benefits claims that we file for our clients, we also work on life insurance waivers of premium claims. When our clients stop working due to an illness or injury, in many instances they already know to research whether they are covered by a long-term or short-term disability policy (or both).
Unfortunately, most people are not aware that the group life insurance (that may be part of your employee benefits package) could be extended free of charge. Typically, when one leaves employment, their group life insurance coverage will be extinguished when their employment ends. In other words, a typical group life insurance policy provided by an employer will only pay death benefits to a designated beneficiary if the deceased passed during their period of employment.
There are two main exceptions to the above typical scenario. First, one may take over paying the premiums themselves. Technically, in this situation, former employees are converting the group life insurance policy over to an individual life insurance policy. When this happens, the former employee is responsible for the payment of all premiums on that policy. At this point, the policy is no longer affected by one’s employment status and coverage continues as long as the covered individual pays the premium.
The second exception to the typical scenario is if one’s employment ends due to medical inability to do the job. If the former employee can prove to the life insurance company that they are disabled as of the day they last worked, many life insurance policies have a clause that allows coverage to be extended without the payment of premiums. In many respects, a life insurance waiver of premium claims works much the same way that a long-term or short-term disability case works. The insurance carrier must be provided proof of disability, which typically consists of forms completed by treating physicians, medical records, and sometimes independent examinations. If the life insurance carrier is satisfied that the claimant meets the definition of disability in the life insurance policy, that coverage will extend beyond the period of employment for free.
How Premium Claim Waivers Work
There are several items to keep in mind regarding waiver of premium claims. First, sometimes the life insurance carrier is different from the long-term disability carrier. This will mean that claimants must keep track of parallel cases with different decision makers and different required forms. It is much simpler if the former employer used the same insurance company for both long-term disability and life insurance.
Second, the life insurance waiver of premium coverage does not typically last as long as long-term disability benefits. Most group life insurance policies have an age limit on how long the life insurance coverage will be extended. A typical max age for life insurance waiver of premium coverage is 60, where long-term disability benefits typically run to age 67.
Lastly, the definition of disability for a long-term disability case is usually different than the definition of disability for a life insurance waiver of a premium claim. It takes a trained eye to locate these clauses in the respective policies and make sense of them.
If you have questions or need help reviewing your policies, please contact me for a free disability law consultation.
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