As the industry hurtles towards the digital age, a court battle is providing a timely reminder of how important advisors are.
The role of advisors was in the spotlight after a judge ruled simply posting benefit requirements isn’t enough to deny a claim after.
After a beneficiary was denied claims on his sister’s life insurance policies because she had not followed guidelines on the company intranet, a court ruled the employer failed to follow the guidelines for making a benefit summary plan description (SPD) available via the company network.
The court also noted that the language in the SPD waiver provision was unclear. Meetings with an advisor, explaining the benefits and spelling out employees’ roles and responsibilities could have cleared up any confusion.
Judith Thomas, started working for Countrywide, the mortgage bank now owned by Bank of America.
She received an automatic life insurance policy and also enrolled in an elective policy underwritten by Cigna as part of her benefits package and participation in the company’s defined contribution plan.
The policies stated benefits and coverage ended if a beneficiary left the company, except for employees that had to depart due to a disability. If that was the case they had to provide proof of their disability to Cigna within nine months of leaving the job.
Thomas was disabled in 2004 and left the company. Her brother filed a claim for $104,000 from each contract in 2008 after his sister died.
Cigna argued that Judith Thomas had never exercised her right to waiver of premium and denied payment, but her brother argued his sister had never been notified of the waiver provision or how to exercise it.
Judge Sandra Townes ruled she found no evidence that Cigna or Countrywide ever provided Thomas with an SPD, or evidence that she was even informed that the SPDs were available on the company intranet.
The case is unlikely to end here with Cigna and Bank of America poised to battle over who is responsible to pay the claim — the underwriter or the plan sponsor.
After a beneficiary was denied claims on his sister’s life insurance policies because she had not followed guidelines on the company intranet, a court ruled the employer failed to follow the guidelines for making a benefit summary plan description (SPD) available via the company network.
The court also noted that the language in the SPD waiver provision was unclear. Meetings with an advisor, explaining the benefits and spelling out employees’ roles and responsibilities could have cleared up any confusion.
Judith Thomas, started working for Countrywide, the mortgage bank now owned by Bank of America.
She received an automatic life insurance policy and also enrolled in an elective policy underwritten by Cigna as part of her benefits package and participation in the company’s defined contribution plan.
The policies stated benefits and coverage ended if a beneficiary left the company, except for employees that had to depart due to a disability. If that was the case they had to provide proof of their disability to Cigna within nine months of leaving the job.
Thomas was disabled in 2004 and left the company. Her brother filed a claim for $104,000 from each contract in 2008 after his sister died.
Cigna argued that Judith Thomas had never exercised her right to waiver of premium and denied payment, but her brother argued his sister had never been notified of the waiver provision or how to exercise it.
Judge Sandra Townes ruled she found no evidence that Cigna or Countrywide ever provided Thomas with an SPD, or evidence that she was even informed that the SPDs were available on the company intranet.
The case is unlikely to end here with Cigna and Bank of America poised to battle over who is responsible to pay the claim — the underwriter or the plan sponsor.
