Life Insurance Lawsuit Filed by Widow Alleges ERISA Violations

A life insurance lawsuit was recently filed alleging that the spouse of a man who passed away did not receive the appropriate benefits entitled to her. Her husband was an employee of a company that provided Sun Life coverage, a life insurance policy, to its workers as a benefit. The policy enabled workers to name beneficiaries who would be entitled to the proceeds of the life insurance policy upon the death of the covered employee.

Life Insurance Lawsuit Filed Over Coverage Contentions

The decedent with coverage in this life insurance lawsuit was employed in his position from July 2010 to January 2017 when he unexpectedly passed away. In addition to other benefits provided by his employer, the life insurance policy selected by the deceased included $130,000 involuntary accidental death and dismemberment coverage and life insurance coverage. The policy was active as of October 1, 2016. The employee in question made payroll deduction payments to cover the premium of the life insurance policy.

When the worker passed away in January, his wife filed the paperwork to recover the proceeds. In response to the wife’s submittal, Sun Life asserted that her late husband’s the life insurance policy only offered $20,000 in coverage. The lawsuit also alleges that company claimed to have received premium payments from the deceased for only $20,000 worth of coverage.

According to the life insurance lawsuit, the insurance company claimed that an email had been sent to the employee’s human resources manager explaining that the worker would need to show evidence of good health in order to increase his benefits to $130,000 in coverage. The human resources manager indicated he would take care of it, but as of the date the lawsuit was filed, no records were presented that the plaintiff ever received the email.

That human resources manager confirmed in February of 2017 that the employee had indeed elected the additional coverage and paid for it through a payroll deduction. According to the lawsuit, the weekly payroll deduction for $20,000 in coverage was $1.32 and the actual premium payments made by the now-deceased were $7.32. The complaint argues that due to the amount of the weekly deduction taken from the employee’s paycheck, the employee and his wife would have had no reason to suspect they had any less than $130,000 in coverage.

The lawsuit argues that the life insurance company violated ERISA protections because they never notified the employee that he needed to provide evidence of good health. Furthermore, Sun Life continued to deduct the payroll amount for the higher premium. ERISA is the Employee Retirement Income Security Act of 1974, which lays out the rules for administering investments and private pension plans. The purpose of the law is to protect retirement funds for Americans, but the law also establishes standards for life insurance, health, disability, and retirement plans.

Did your life insurance company violate ERISA? See if you have a case to file a life insurance lawsuit by filling out the form on this page for a free case evaluation.