Lincoln National Life settles with DOL over insurability practices

Company to adjust its "proof of good health" requirement

Lincoln National Life settles with DOL over insurability practices

Legal Insights

By Kenneth Araullo

A unit of Lincoln Financial Group has reached a settlement agreement with the US Department of Labor to revise its evidence of insurability requirements, the federal agency announced.

Lincoln National Life Insurance Co will adjust its “proof of good health” requirement for participants in job-based life insurance plans, according to the DOL.

As per AM Best, the settlement prohibits the insurer from denying a beneficiary’s claim due to a lack of evidence of insurability if premiums have been received for three months or more.

This agreement follows an investigation by the department’s Employee Benefits Security Administration (EBSA), which found that Lincoln had denied life insurance benefits to participants’ beneficiaries despite accepting premiums for months or years without obtaining evidence of insurability.

Lisa M Gomez, assistant secretary for Employee Benefits Security Administration, stated that workers expect to receive benefits after paying premiums. She emphasized that life insurance companies must ensure that plan participants meet eligibility requirements once premiums are paid.

“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,” Gomez said.

Lincoln settlement conditions

As part of the settlement, Lincoln may request evidence of insurability from existing participants only within the first year of premium payments. Additionally, Lincoln cannot consider an insured’s health condition if it arose after the first premium payment date.

These requirements apply to Lincoln National Life Insurance Co, its parent company, and Lincoln Life & Annuity Company of New York. Lincoln has voluntarily reprocessed claims dating back to March 2018 to provide benefits for claims denied solely due to the participant’s failure to provide evidence of insurability.

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