The U.S. Department of Labor has announced a settlement with Lincoln National Life Insurance Co., mandating changes to the company's evidence of insurability requirements for participants in job-based life insurance plans. The agreement prohibits Lincoln from denying claims based on the lack of evidence of insurability if premiums have been received for three months or more.
This development follows an investigation by the department’s Employee Benefits Security Administration (EBSA), which found that Lincoln had denied life insurance benefits to beneficiaries after accepting premiums for extended periods without obtaining evidence of insurability from participants. Beneficiaries faced numerous claim denials due to the participants' failure to provide such evidence, despite having paid premiums.
"Workers pay premiums believing they will receive their promised benefits," said Assistant Secretary for Employee Benefits Security Administration Lisa M. Gomez. "Once workers pay these premiums, life insurance companies must verify that plan participants satisfy eligibility requirements. EBSA will not allow companies to neglect their responsibility for making timely eligibility determinations, collect premiums for months or years and then deny payment of death benefits to beneficiaries because the company failed in its legal responsibility."
Under the settlement, Lincoln is required to request evidence of insurability from existing participants only within the first year of premium payments. The company cannot consider any health conditions arising after receiving a participant's initial premium payment. These stipulations apply not only to Lincoln National Life Insurance Co., but also its parent company, Lincoln National Corp., and another subsidiary, Lincoln Life & Annuity Co. of New York.
Lincoln has informed the department that it voluntarily reprocessed claims dating back to March 2018, providing benefits for claims previously denied solely due to a lack of evidence of insurability.
This settlement aligns with similar agreements reached by the department with United of Omaha Life Insurance Co., Prudential Insurance Co., and Unum Life Insurance Co. of America in recent years.
Lincoln Financial Group, which operates under the marketing name for Lincoln National Corp. and its affiliates, serves approximately 17 million customers across various services including annuities, life insurance, group protection, and retirement plans as of December 31, 2023.
Attorney Dana M. Hague from the department’s Office of the Solicitor in Kansas City negotiated this settlement while EBSA’s Kansas City and Philadelphia Offices conducted the investigation.
Learn more about EBSA.
___
