Failure to Convert Life Insurance Claim Attorney

Can a Life or AD&D Insurance Claim Denial for Failure to Timely Convert from Group to Individual Coverage After Employment Terminates be Overturned on Appeal?

Answer: Yes. Denials for failing to convert are often overturned on appeal with benefits paid in full.

As a former insurance company attorney, my aim here is to teach, step-by-step, our three most successful arguments to appeal and reverse claim denials for failure to convert from group to individual life insurance coverage.

These three arguments are our most successful because the courts recognize them as valid reasons for reversing such denials, and insurance companies and ERISA plan administrators know it. 

Therefore, discussion of how the courts view the validity of these denials is key to a full understanding, and will be addressed as well. Critical insurance policy provisions that are easily overlooked, and examples from actual cases we have won for our clients are included for concrete context and understanding. 

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The Three Most Successful Arguments to Appeal a Claim Denial for Failure to Timely Convert to Group Coverage With the Best Chances of Winning?

Our three most successful arguments for overturning such a denial on appeal are:

1. The Insurance Company Misinterpreted its Own Policy Provisions;
2. The ERISA Benefit Plan Administrator’s or the Insurance Company’s Statement or Omission Caused the Insured’s Failure to Timely Convert;
3. The ERISA Benefit Plan Administrator’s or Insurance Company’s Failure to Follow their Own Procedures Caused the Insured’s Failure to Timely Convert;

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What Does it Mean to Convert from Group to Individual Coverage?

A brief background is helpful. Most life and accidental death insureds and beneficiaries don’t realize that an employer’s group life or accidental death and dismemberment insurance coverage can end when the insured employee is absent from work due to sickness, illness, or disability after a certain period of time passes, or when formal employment terminates.

When coverage ends for that reason, insured employees have the right to “convert” their employment-based group coverage to an individual insurance policy by simply filing an application and directly paying the premium that had previously been deducted from payroll. The deadline for doing so is between 30 and 60 days from the time their group coverage ends under most policies. They can convert coverage regardless of how serious their illness may be, even if it’s a terminal illness expected to take their life very quickly. They do not have to first undergo the insurer’s “insurability” process of proving good health.

Thus this right to convert to individual coverage is extremely important to insureds and their beneficiaries, because employees who go out of work due to a serious illness, especially with a terminal diagnosis, will not likely find another insurer willing to insure them under a life insurance policy.

For the same reason, insurance companies are highly motivated to avoid continuing life insurance coverage for an insured now known to have a higher, or even inevitable likelihood of dying soon. They would obviously rather not pay. 

In my opinion, this is precisely why the right and need to convert to individual life insurance coverage to keep it in force is often not clearly communicated to the insured or beneficiaries, leading so many to miss that critical opportunity. It’s by design.

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How is an Insured Expected to Know that Conversion is Needed to Maintain Coverage?

That’s the fundamental problem with the complicated conversion process. An insured employee takes a leave of absence for terminal illness, and nobody directly makes them aware of this right to convert. Then the deadline to do so passes shortly before the employee dies, with the employee and their life insurance beneficiary thinking they are still covered under the group policy. It happens all the time.

We regularly get calls from life and AD&D insurance beneficiaries describing that exact scenario. Their insured family member dies, and the beneficiary files a claim with the insurer thinking group coverage was still in place. Nobody involved had any idea of this need to convert coverage, because nobody ever told them they needed to do so. But the insurer denies the claim stating that the insured missed the “conversion deadline” set forth in the group policy. 

 In the saddest of cases we see, and too often, the insured leaves employment due to a terminal illness, and the insured’s employer mistakenly assures the insured and their beneficiary family members that all insurances are soundly in place, including life insurance, and that nothing more is needed from them to keep it in place. Believing that, the insured’s family spends the remaining days, weeks, or months of the insured’s life focused on their loved one’s peace and comfort while the conversion deadline passes. Then they are shocked when the insurer denies coverage for failure to convert to individual coverage. They’re shocked because:

1. Nobody informed them of the need to do so,
2. The employer informed them that nothing needed to be done to keep all insurances in place, and
3. They obviously would not have let tens or hundreds of thousands of dollars in coverage lapse for an insured diagnosed with a terminal illness with a short time left to live.

Fortunately, denials for failing to convert can be overturned on appeal with benefits paid in full under a variety of circumstances. To understand how to analyze the circumstances of such a denial for best chances of winning on appeal using one or more of our three best arguments listed above, we must begin by examining how the courts view the validity of denials for failure to convert to individual coverage.

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How do the Courts View the Validity of Denials for Failure to Convert to Individual Coverage?

The courts view these cases under a somewhat rigid framework that is not very favorable for the beneficiary. The courts determine whether the employer’s ERISA plan “certificate of coverage” or “summary plan description” document: 

1. Was provided to the employee, whether through the employer’s website portal, by email, or in paper form; and
2. Contained an adequate description of the employee’s right to convert from group to individual life insurance coverage, the conversion deadline, and what the employee must do to complete conversion before that deadline. 

If those two requirements are met, that is considered sufficient “notice” to the employee to protect the insurer from having to pay a life or accidental death insurance claim if the employee dies after failing to timely convert coverage once employment ends.

There is no requirement that the employer or insurer again give notice or remind the employee to consider whether to convert coverage at the time active work or the employment relationship ends. And it doesn’t matter whether the employee ever actually read the conversion language in the certificate of coverage or summary plan description document. The employer simply providing the document (or access to it) containing adequate conversion right notice is sufficient for the insurer to defeat the claim. 

Most employers do provide employees with a certificate of coverage or summary plan description adequately describing conversion rights. But even when employees do read those documents, the provisions governing the conversion process and deadlines are so complicated that insureds often think they are still covered when they actually are not. 

Our three most successful arguments for appealing and overturning a denial for failure to convert work even if the employer did provide the right documents to its employees.

Here they are:

• The Insurance Company Misinterpreted its Own Policy Provisions Regarding Conversion

Insurers often misinterpret their own policy provisions regarding conversion rights and deadlines. When a claim is denied on the basis of failure to convert, the relevant policy language must be carefully analyzed along with the key facts and dates to find insurer mistakes. Key provisions and facts are easy to overlook. Relevant dates are always critical.

Examples from successful appeals for two of our clients will concretely illustrate how to analyze the critical policy provisions and facts involved in these cases:

Example 1:

The facts:

Our Texas client was the young widowed wife of her employed breadwinner husband (Decedent) who stopped working on disability status after a terminal cancer diagnosis, and died less than three months later. 

Mutual of Omaha Life Insurance Company provided life insurance coverage for the employer’s ERISA benefits plan. For the short duration between Decedent’s last day of work and his death, our client’s life was as anyone might imagine, caring for her dying husband and their children. 

At no time did Decedent or our client ever receive notice from Mutual of Omaha or the employer of any need to convert from group to individual life insurance to maintain coverage despite the employer knowing their dire circumstances. But when our client made a claim for life insurance benefits after he died, the insurer denied the claim for failure to timely convert to an individual policy. 

The policy conversion deadline:

The conversion provision of the employer’s group policy required Decedent to convert to an individual one within 60 days after “insurance ends” to maintain coverage. But if Decedent died within that 60-day deadline, he was covered even if he had not yet converted. 

The policy stated it this way:

“If you are entitled to obtain a Conversion Policy and die within 60 days after “insurance ends” or reduces, we pay the amount of life insurance which could have been converted, even if you did not apply for a Conversion Policy.”

The insurer’s reason for claim denial:

Decedent’s last day of work before claiming disability for cancer was Friday, February 28, 2025. The 60-day mark after that date was April 29, 2025. But Decedent did not convert coverage, and his date of death was May 22, 2025. The insurer’s denial letter reasoned that April 29, 2025 was the deadline for Decedent to convert to individual life insurance coverage, and since Decedent did not convert before that date, his May 22, 2025 death was not covered.

Our analysis and appeal:

We reviewed the denial letter, the claim file, Decedent’s paystubs from the employer, email communications between Decedent and his employer, and the key policy provisions, and relevant dates. 

We discovered that the insurer failed to consider two important policy provisions in determining when “insurance end[ed]” for Decedent. Our analysis concluded that he died within the 60-day deadline, entitling our client to benefits.

First, the policy stated:

“Actively Working, Active Work means you are:

1. a) performing the normal duties of your job for the Policyholder on a regular and continuous basis 30 or more hours each week; and

1. b) receiving compensation from the Policyholder for work performed for the

You will be considered to be actively working on any day that is a regular paid holiday or day of vacation, or regular or scheduled non-working day, provided you were actively working on the last preceding regular work day…”

On appeal, we proved that Decedent never worked weekends. Therefore Saturdays and Sundays were always “regular non-working days” for Decedent. Decedent was actively working on the last preceding regular work day of Friday, February 28, 2025. Therefore, he was considered to be still “actively working” through Sunday, March 2, 2025.

Second, the policy further stated:

“WHEN INSURANCE ENDS

Insurance ends:

1. a)     for all Insured Persons on the last day of the month in which you are no longer Actively Working;…”

Therefore, since the first policy provision extended Decedent’s “actively working status to March 2, 2025, Decedent’s “insurance ended” on March 31, 2025, the last day of the month in which he was no longer “actively working.” 

As we pointed out on appeal, Decedent’s May 22, 2025 death was within 60 days after his “insurance ended.” Therefore, his death was covered, and our client was entitled to benefits for that reason alone.

Finally, we pointed out another policy provision that independently meant his death was covered. It stated:

“CONTINUATION OF INSURANCE FOR INJURY OR SICKNESS

When your insurance would otherwise end because you are no longer Actively Working due to your Injury or Sickness, you may be able to continue insurance under this provision. The total continuation period under this provision and the CONTINUATION OF INSURANCE FOR LAYOFF, LEAVE OR FURLOUGH provision will not exceed 12 months.

Insurance may be continued under this provision if the following conditions are satisfied:

1. a) we receive verification of your Injury or Sickness from the Policyholder upon request; and

1. b) we continue to receive premium payment when due (premiums must be paid by you or on your behalf)….”

On appeal, we further proved to the insurer through Decedent’s paystubs that premium was indeed deducted from his paycheck through the period ending May 3, 2025, paid by check on May 8, 2025, for life insurance through the end of May. Accordingly, his insurance continued through his death on May 22, 2025 for that reason as well.

The outcome:

Mutual of Omaha reversed its denial on appeal, and our client received the much-needed benefits her family deserved.

Key takeaway 1: Never give up.

Key takeaway 2: You need to analyze the policy provisions and facts meticulously to determine whether the life insurance company misinterpreted them. Even the day of the week (Friday) of Decedent’s last day “actively at work” was a key factor in the analysis. Whether intentionally or negligently, the insurer almost deprived a grieving widow of benefits her family needed and deserved.

Example 2:

This Texas client was the brother and life insurance beneficiary of his sister, Decedent, who stopped working on disability status after a terminal cancer diagnosis. She died several months later. This fact pattern is similar to the above Example 1, but you will see that the policy provisions are different.

Minnesota Life Insurance Company provided life insurance coverage for Decedent’s employer’s ERISA benefits plan. At no time before or after she stopped working did Decedent or our client ever receive notice from Minnesota Life or the employer of any need to convert from group to individual life insurance to maintain coverage. This was despite, just like the example above, the employer knowing that their employee had a terminal diagnosis, and would obviously want to do everything necessary to maintain that coverage. 

But when our client made a claim for life insurance benefits after Decedent died, the insurer denied the claim for failure to timely convert coverage. 

Our client appealed without an attorney, but the appeal was denied as well. When he came to us, the next available step was to file a federal ERISA lawsuit, which we did.

The 31-day policy conversion deadline:

 This policy had only a 31-day conversion deadline after “group insurance terminates.” It stated: 

“What is the conversion right?

You may convert this insurance to a new individual life insurance policy if all or part of your life insurance under the group policy terminates.

How do you convert your insurance?

You convert your insurance by applying for an individual policy and paying the first premium within 31 days after your group insurance terminates. No evidence of insurability will be required.

What happens if you die during the 31-day period allowed for conversion?

If you die during the 31-day period allowed for conversion, we will pay a death benefit regardless of whether or not an application for coverage under an individual policy has been submitted. The death benefit will be the amount of insurance you would have been eligible to convert under the terms of the conversion right section.”

The insurer’s reason for claim denial:

Decedent died on June 6, 2025. Minnesota Life denied our client’s administrative appeal stating that: “According to the policyholder’s records, [Decedent] was insured for Supplemental Group Term Life Insurance coverage from 1/1/2017 through 5/1/2025. Coverage ended on 5/1/2025, when her employment terminated as a result of her transition to Long Term Disability (LTD)… a 5/3/2025 notice was issued to [Decedent]” explaining that a conversion application and premium were required to be received “within the applicable timeframe” for continuation of coverage “beyond 5/1/2025.” 

Since Decedent never filed a conversion application, the insurer reasoned that no coverage was in effect.

Our analysis and lawsuit:

We analyzed the denial letter reasons in light of the known facts, the relevant dates, the claim file, and all policy provisions.

We discovered that the insurer failed to consider several key policy provisions when it determined that “coverage ended on 5/1/2025, when her employment terminated.” In fact, the insurer was dead wrong. Our analysis concluded that Decedent’s June 6, 2025 death took place within the 31-day conversion deadline, entitling our client to benefits.

Here’s why.

The policy had an “extension provision” stating:

 “Notwithstanding anything in the certificate to the contrary, an insured employee shall remain covered until the end of the month in which he or she ceases to meet the eligibility requirements.” 

Therefore, since Minnesota Life agreed that Decedent’s group coverage remained in effect through 5/1/2025, Decedent remained covered until the end of that month, with coverage terminating 5/31/2025, which is the start date for the counting policy’s 31-day conversion window.

Decedent’s June 6, 2025 death was within the 31-day period allowed for conversion after her insurance terminated on 5/1/2025 as admitted in its appeal denial letter.

Key takeaway 1: A life insurance denial letter for failure to convert that may seem valid, but not be valid at all.

Key takeaway 2: The insurer’s denial must be supported by the policy provisions, and these are often misinterpreted by life insurance companies.

The above examples provide a framework for analyzing whether a denial based on missing a life insurance conversion deadline misinterpreted policy provisions. Next, we’ll discuss plan administrator or insurance company misleading communications or failure to communicate causing the insured’s failure to convert coverage.

• The ERISA Benefit Plan Administrator’s or the Insurance Company’s Statement or Omission Caused the Insured’s Failure to Timely Convert

Sometimes denials for failure to convert are caused by the ERISA plan administrator (this is usually the employer) or the insurer inadvertently leading an insured to miss a conversion deadline. This can either be through an erroneous or misleading communication about the coverage, or through a failure to communicate when the insured asked for information or was confused about life insurance coverage continuing after employment ends. 

Federal court case law takes this view: Even if the plan documents adequately explaining the conversion process were provided to an insured employee, a denial for failure to convert should be overturned when communication or failure to communicate by the plan administrator employer or insurer leads an insured to miss a conversion opportunity.

Here’s a great example from another one of our client’s cases to illustrate, because it involved miscommunications by both the employer and the life insurance company leading to an insured failing to timely convert coverage.

Example:

The facts:

Our client, Susan and her husband Jack (not their real names), learned that Jack, the family breadwinner, had terminal cancer and was expected to die within a few months. Jack went out on disability benefits after learning of his diagnosis. Meanwhile his employment was terminated, as it was clear he wouldn’t be returning to work.

They began planning how Susan would get by without Jack’s financial input. First priority was to make sure the life insurance benefits he had through his employer’s ERISA benefit plan remained in effect. Life Insurance Company of North America (LINA, which later became New York Life Insurance Company) provided the insurance policy for the plan. So they asked Jack’s employer and LINA to tell them all steps needed to convert his life insurance coverage to an individual policy. 

The insurer’s denial:

They were told that they just needed to pay their life insurance premium to the employer, who would then pay the insurance company to keep coverage in effect. They did that, and believed that all life insurance coverage for Jack remained effective. But after Jack died, Susan made a claim for his life insurance and received a denial letter. 

Our investigation:

We reviewed the claim file and Jack’s employment and payroll records, and were able to prove that the premium for Jack’s life insurance policy was deducted from his pay and received by the insurance company up until the time of his death. 

Our investigation also disclosed 20 pages of email exchanges between the employer and LINA personnel demonstrating that Jack asked his employer specifically about all steps necessary to convert his coverage. The employer relayed the question to the LINA. LINA said that it would get back to the employer with specifics, but never did. The emails demonstrated that the employer and LINA personnel remained confused and in disagreement about Jack’s conversion provisions even after his death, and they never did tell him the right steps to take to convert coverage despite his direct inquiry.

We presented all this evidence to LINA in an administrative appeal of Susan’s claim, but it still refused to pay, claiming that Jack did not take the technical step of sending in a written form requesting conversion. They denied Susan’s administrative appeal on that basis.

Our lawsuit:

Sometimes a lawsuit in federal court is necessary to get claim denials reversed, so we sued both LINA and the employer in federal court. We brought the case of Eddy v. Colonial Life Ins. Co. Of America, 919 F.2d 747 (DC Cir.1990), a case involving strikingly similar circumstances, to the Court’s attention. That case states that under federal ERISA law, an employer or insurance company “has a duty upon inquiry to convey to a lay beneficiary…correct and complete material information about his status and options when a group policy is cancelled….This information would include the inapplicability of “continuation” provisions, the availability of “conversion” options, and the procedures for converting…health and life insurance coverage.” In that respect, both the employer and LINA dropped the ball.

Finally, close to the time of a scheduled trial, and faced with a likely federal court judgment against them, LINA agreed to pay full benefits to Susan.

Key takeaway: If the employer plan administrator miscommunicates to the insured, or fails to accurately answer questions about the conversion process, it can be enough to reverse a claim denial. Investigate all surrounding facts and communications thoroughly. 

• The ERISA Benefit Plan Administrator’s or Insurance Company’s Failure to Follow their Own Procedures Caused the Insured’s Failure to Timely Convert

The third or our three most successful appeal arguments against  failure to convert denials is when ERISA benefit plan administrator’s or insurance company’s failure to follow their own procedures caused the insured’s failure to timely convert. 

This argument comes into play when the plan administrator or insurer normally follows certain procedures that trigger employees getting notified and receiving an application to convert coverage when their group life insurance terminates, but those procedures are not followed.

An example from another one of our Texas clients will illustrate.

Example: 

The facts: 

Our client’s mother, Decedent, went out of work under her employer’s ERISA long term disability plan suffering with lupus and adrenal insufficiency illness. She was also an insured under the plan’s Life insurance coverage insured by UNUM Life Insurance Company of America (UNUM). She died a short time after stopping work. Our client was the beneficiary daughter.

After she stopped working, her employer, which was also the plan administrator, assured her that her life insurance coverage would remain in effect as long as she continued to pay the insurance premium. So paid the premium to her employer until she died. 

The denial:

When our client filed with UNUM for her life insurance, UNUM denied the claim for failure to timely convert from group to individual coverage.  

Our investigation and appeal:

We gathered Decedent’s bank records, which proved Decedent’s payment of premium to the employer. The claim file and life insurance policy conversion provisions showed that the employer had specific procedures in place to trigger an employee’s notification of the right and need to convert from group to individual coverage, and to send the employee an application to do so once work had stopped. But those procedures were not followed.

The key policy provisions:

UNUM’s policy provided that when employment terminates, the employer was to notify UNUM, and a conversion application would be mailed the employee’s address. The provision read as follows: 

“ONCE YOUR COVERAGE BEGINS, WHAT HAPPENS IF YOU ARE NOT WORKING DUE TO INJURY OR SICKNESS?

If you are not working due to injury or sickness, and if premium is paid, you may continue to be covered up to your retirement date.”… 

“WHAT INSURANCE IS AVAILABLE WHEN COVERAGE ENDS?    (Conversion    Privilege)

When coverage ends under the plan, you and your dependents can convert your coverages to individual life policies, without evidence of insurability…

You and your dependents must apply for individual life insurance under this life conversion privilege and pay the first premium within 31 days after the date:

– your employment terminates; or

– you or your dependents no longer are eligible to participate in the coverage of the plan…

“APPLYING FOR CONVERSION

If your coverage terminates, Unum will be notified by your Employer and a conversion application form which includes cost information will be mailed to your home address.

When you complete the conversion application, send it with the first premium amount to [a Unum address].”  

Emails between the employer plan administrator and UNUM found in the claim file proved that the employer failed to notify UNUM of Decedent’s employment ending, so no conversion application was sent to her. Additionally, although Decedent paid premium to her employer to maintain continued life insurance coverage, the employer did not pass those payments along to UNUM. 

Still, the employer and UNUM refused to pay and denied the appeal. 

The lawsuit:

We filed suit in federal court, and were able to finally get the claim resolved there.

Key takeaway: Study the policy or plan provisions in detail, as well as all communications in the claim file to discover if the employer plan administrator or life insurance company had any standard procedures in effect regarding conversion that they failed to follow.

In sum, life or accidental death and dismemberment insurance claim denial for failure to timely convert from group to individual coverage after employment terminates can often be overturned on appeal or in court. So whatever you do, don’t give up. We find the above three arguments to be the most successful to get such a denial overturned for our clients. Study the policy provisions, key dates, and all communications with the employer and those found in the claim file to determine whether one of these arguments might apply.

We’re always available to discuss these denials in detail to see if we can help. 

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