My term life insurance policy was cancelled rather than being transferred. What are my options?
UPDATED: Feb 7, 2012
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Asked February 7, 2012
If the term life plan is part of an employer's benefits package, your term life insurance policy will not terminate immediately on losing the job. Insurance companies recognize that people's place of employment changes from time to time, and most companies have procedures in place to transfer the policy to private coverage.
States have safeguards in place to prevent insured persons from losing their coverage due to a loss of employment. The way it works is that your employer notifies the insurance company within 30 days of termination, and the insurance company then forwards the documents necessary to transfer the coverage directly to you, after which you have a period of time to complete the forms and return them. If the employer or insurance company did not do their part, then you should be able to get the policy reinstated.
If you received the papers and did not file them in time, you can contact the insurance company and explain your situation. It may be that the insurance company will extend the transfer period, but your premiums will have to be paid up to date. If your premiums are behind, then the insurance company is within their rights to cancel the policy on the grounds that you are not holding up your end of the contract, i.e., making the payments.
Your best solution is to contact the insurance company and explain the situation. If the insurance company will not work with you on the problem, then you contact a lawyer. Keep in mind that insurance companies do not appreciate being taken to court by the people they insure, and make reasonable attempts to get the problem straightened out on your own before you bring it into a legal conflict. A good lawyer can help if all else fails, but hiring an attorney should be the last resort, not the first one.
Answered February 7, 2012 by Anonymous