DOL settles with United of Omaha Life Insurance to reform its evidence of insurability

The U.S. Department of Labor Friday announced a settlement with United of Omaha Life Insurance Co. that requires the company to revise how it administers its requirement that participants in employer-sponsored life insurance plans provide proof of good health — referred to as evidence of insurability — before obtaining coverage in certain instances.

An investigation by the department’s Employee Benefits Security Administration found United often accepted premiums for years without determining if insurability requirements were satisfied, causing participants and their beneficiaries to believe they had coverage. After the participant died, United would then often deny claims for benefits on the grounds the company never received the participant’s evidence of insurability, leaving their beneficiaries without life insurance benefits for which their loved one had paid.

EBSA’s investigation focused on how United administered life insurance plans covered by the Employee Retirement Income Security Act of 1974. The investigation found that the company has denied numerous claims based on a participant’s failure to have provided evidence of insurability.

The settlement reached by the department’s Office of the Solicitor gives United 90 days after it receives a participant’s first premium payment to determine whether the participant has satisfied any applicable evidence of insurability requirements. After the 90-day period expires, the company cannot deny a claim for life insurance benefits for reasons related to evidence of insurability. These requirements also apply to United’s parent company — Mutual of Omaha Insurance Co. — and United’s subsidiary, Companion Life Insurance Co.

“This terrible practice denied grieving families life insurance benefits for which their loved ones had paid, in some cases, for many years,” explained Solicitor of Labor Seema Nanda. “This settlement with United of Omaha Life Insurance ensures that beneficiaries are not harmed by the company’s failure to verify, on a timely basis, that premium-paying participants have satisfied applicable evidence of insurability requirements. All insurers should examine their practices to prevent similar conduct.”

The department’s settlement with United follows a similar agreement it reached with Prudential Insurance Co. in April 2023. Investigations into other life insurance companies’ practices surrounding evidence of insurability are ongoing.

“Workers who pay life insurance premiums should feel secure that their beneficiaries will receive the benefits for which their life insurance company was paid,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez. “The Employee Benefits Security Administration will take appropriate action against insurance companies that collect regular premium payments from plan participants without ensuring up front that participants have satisfied eligibility requirements like insurability, and later cite those requirements to deny benefits after the participant passes away.”

United has advised the department that it has voluntarily reprocessed claims dating back to February 2018 to provide benefits for claims denied based solely on a participant’s failure to provide evidence of insurability.

EBSA’s Kansas City Office conducted the investigation, and attorneys Jeff Hahn, Christine Han, Sarah Holz, and Jamie Bowers negotiated the settlement for the department.