The U.S. Department of Labor has announced a settlement agreement that could help simplify the group life insurance claim process for clients coping with the loss of loved ones.
DOL lawyers negotiated the settlement agreement with Prudential Insurance Co. of America, to resolve concerns about how the company has dealt with questions about some group life insureds' insurability.
The settlement agreement applies directly only to Prudential Insurance Co. of America — an arm of Prudential Financial — but Labor officials said they hoped other group life issuers would work harder to verify workers' eligibility for coverage before collecting premiums from them, rather than raising questions about evidence of insurability when beneficiaries file death claims.
In the agreement, the parties note that Prudential has neither admitted nor denied that it is a fiduciary under the Employee Retirement Income Security Act, and that it has neither admitted nor denied that it has failed to discharge any ERISA-related fiduciary duties.
What It Means
For some clients who are group life beneficiaries, the settlement could lead to simplification of the claim process.
The Changes
Under the terms of the agreement, Prudential can challenge a group life death claim based on lack of evidence of insurability only if an insured individual who dies has been paying premiums for three or fewer months.
Prudential can use concerns about insurability to take coverage back from living group life insureds only within one year after the insured individual has started paying for the coverage.
Details
Prudential ranked third in the United States in group life premiums written in 2021, with a market share of about 10%.
