Employer-Offered Insurance Benefits – Know Your Rights

Life insurance, accidental death and dismemberment insurance, critical illness benefits, chronic illness benefits, accelerated death benefits, cancer benefits, heart attack riders, and hospital indemnity benefits. Employees of mid to large sized companies tend to receive some combination of these types of coverage as part of their benefits package. Often times, there is an initial enrollment period during which time the employees are given the opportunity to elect types and amount of coverage. Other times, the benefits are automatically applied to each qualifying employee and are paid for by the employer. Don’t get me wrong, employee benefits such as these types of insurance are a great way to give back to employees. However, from the point of view of a life insurance attorney, there are still a few concerns. 

If you have ever been offered any of the above-listed types of coverage through an employer, you will likely be unable to recall ever seeing the policy which lays out the guidelines for coverage. Instead, you may have received a “summary plan description” or a pamphlet highlighting some of the important things to know about the coverage. Many people confuse the two. A summary plan description (SPD) is only a summary of the coverage and some important exclusions that may disqualify you from being covered. The policy should define all relevant terms, lays out all qualifying events for coverage, as well as all events that would disqualify you from coverage. The policy will also advise as to the proper claims procedure, and your legal rights at the state or federal level depending upon which is applicable. 

There are two glaring problems with employer-offered coverage: (1) employers are not required to provide a copy of the policy to each employee, but merely make it available upon request; and (2) employees are generally unaware that the SPD is NOT the policy. Having never seen the policy that governs their insurance benefits, employees refer to the SPD for guidance on whether their qualifying event is covered. Unfortunately, the SPD is not generally legally binding and is not a complete explanation of the coverage available. As a result, employees are left with an incomplete understanding of what they are entitled to and what the appropriate procedure is to obtain accurate information. 

While it would be impossible for anyone to tell an employee exactly what coverage they are entitled to without seeing the policy, I would bet that the following things are almost universally true: 

• If you request a copy of the plan documents (policy) from your employer, they will provide them. 
• The policy should contain a list of rights available to you as an employee covered under the plan. 
• The policy will state in plain language what types of events are covered generally, such as: basic/voluntary/supplemental life insurance, AD&D insurance, chronic/critical illness benefits, etc.
• The name of the insurance company providing the coverage

These elements of the policy provide a solid foundation for beginning to understand what type of coverage you have, what rights you have under the policy, and who to turn to for more information. If you find yourself in position where you have requested the policy and haven’t received it, believe that you have suffered a loss that should be covered by the policy, or did not receive notice of changes to your policy, you may have legal cause of action and should contact a life insurance attorney immediately.