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Baldwin Bulletin

Risks for Employers Administering Supplemental Life Coverage

The Baldwin Group
Updated: July 8, 2024
3 minute read

On June 11, 2024, the Department of Labor (“DOL”) announced a recent settlement with Unum Life Insurance Company of America (“Unum”) and Lincoln National Life Insurance Co. (“Lincoln”) that require the companies to change their evidence of insurability requirements – commonly known as proof of good health –for participants in job-based life insurance plans. The settlements followed an investigation into the carriers’ group supplemental life insurance claims practices. The DOL investigation found that Unum and Lincoln routinely accepted premiums (via employer payroll deductions) for many years without verifying if participants satisfied an evidence of insurability (EOI) standard.

Employer Action Items

Employers that offer supplemental life coverage for their employees should review their plan policies with their benefits consultant or counsel.


The DOL’s Employee Benefits Security Administration (“EBSA”) investigated Unum’s and Lincoln’s administration of life insurance plans covered by the Employee Retirement Income Security Act (“ERISA”). EBSA found that the companies often accepted premiums without verifying if participants were insurable, leaving participants and their beneficiaries to believe they had coverage. Investigators learned Unum often denied benefits claims after a plan participant died, claiming it never received proof of insurability. This left beneficiaries without the life insurance benefits for which their loved ones had paid. For Lincoln,  the settlement forbids Lincoln from denying a beneficiary’s claim based on the lack of evidence of insurability if premiums have been received for three months or more. 

“The U.S. Department of Labor will take appropriate action against any insurance company that collects regular premium payments from plan participants and later tries to wrongfully deny benefits based on technicalities like ‘insurability’ after the participant passes away,” said Regional Solicitor Maia Fisher in Boston.

EBSA’s investigation also revealed that Unum provided coverage to dependents in certain policies without evidence of insurability. However, if the dependent died within two years of the policy’s issuance, Unum would review their medical records to determine whether they were disabled from the time of enrollment until their death. If Unum found the dependent was disabled at the time of enrollment, it would then deny coverage, citing a delayed effective date of coverage. Unum did not clearly inform participants or dependents at enrollment that coverage would be delayed in these circumstances.

The settlement for Unum prohibits the denial of benefit claims under an ERISA-governed group life insurance policy solely because of a lack of evidence of insurability when a plan participant has paid premiums for 90 days or more. In addition, the company must take steps to make changes to their delayed effective date of coverage for dependents more transparent to participants and policyholders.   

Unum has notified the department that it will voluntarily re-process claim denials based on lack of evidence of insurability from Jan. 1, 2018, to the present and claim denials based on the delayed effective date provision from July 1, 2016, to the present.

The Lincoln settlement also requires that Lincoln may only request evidence of insurability from existing participants within the first year of them paying premiums. Lincoln cannot consider a participant’s health condition if it arose after the date of Lincoln’s first receipt of the participant’s premium payment. These requirements apply to Lincoln National Life Insurance Co. as well as its parent company, Lincoln National Corp. of Radnor and Lincoln Life & Annuity Co. of New York, another subsidiary of Lincoln National Corp.

This settlement follows similar agreements the DOL reached with Prudential Insurance Co. in April 2023 and United of Omaha Life Insurance Co. in September 2023. Investigations into other life insurance companies’ practices surrounding evidence of insurability are ongoing.

EBSA’s Boston regional office conducted the DOL’s investigation, and attorneys Suzanne Reilly and Celeste Moran, and ERISA Counsel Christine Collins of the Boston Regional Solicitor’s Office, negotiated the settlement for the DOL.

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