Life Insurance Benefits Won on Appeal after Mutual of Omaha Denied a Widow’s Life Insurance Claim for Failing to Timely Convert Employment Group Life Insurance Policy to Private PolicyÂ
The facts:
Our Texas client was the young widow 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.Â
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.Â
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.Â
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 pay stubs from the employer, email communications between Decedent and his employer, and the key policy provisions and relevant dates.Â
We discovered that the insurer failed to consider two important policy provisions in determining when “insurance ended” 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:
a) performing the normal duties of your job for the Policyholder on a regular and continuous basis, 30 or more hours each week; and
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:
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.”Â
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:
a) we receive verification of your Injury or Sickness from the Policyholder upon request; and
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.
Results may vary. Every case is different, and no outcome can be guaranteed.
