Wednesday, 05 April 2017 WRN# 17.04.05
TOPIC: Payment of Group Life Benefits Can Be Denied Despite Two-Year Incontestability Clause and Employer’s Misrepresentation of Coverage.
A U.S. District Court held that: (1) a group life insurance policy’s two-year incontestability clause, (2) the employer’s misrepresentation regarding the retired employee’s continued coverage, and (3) the retired employee’s payment of annual premiums did not preclude insurer from asserting that the retired employee was not in fact covered under the employer-provided coverage. At the employee’s retirement, employee was advised by employer that he was a “qualified retiree” under the plan, which would allow coverage to continue if desired. The employee paid annual premiums after retirement to maintain coverage, and the employer identified him as an insured in a census submitted to the insurer. Following the death of the retired employee, however, the insurer asserted that he was not a “qualified retiree” under the policy’s terms and coverage terminated upon his retirement. The court held that the policy provisions pertaining to continued coverage eligibility are independent of, and unaffected by, the policy’s incontestability clause. See Melanie F. Denney v. The Guardian Life Insurance Company, 2017 WL 1155697 (2017)
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