There are many details to consider around group life insurance. Last week we covered five things employers need to know: evidence of insurability (EOI), continuation of coverage, waiver of premium, age reductions, portability and conversion. In this week’s post, we’ll discuss age band changes, enrollment, dependents and claims.
The last five:
6. Age band changes: Employers are not always certain of their policy’s “age bands”—the ages at which employees move into higher premium classes.
- These bands are typically five-year terms, but actual transition ages may vary by carrier.
7. Enrollment: Every employer has their own process but there are some common themes to consider:
- Employers need to understand when and how employees can make changes to their life insurance policies, and when evidence of insurability is required.
- Most carriers offer a certain amount of guaranteed issue coverage at initial enrollment with the option for employees to increase their benefit amount if they complete an EOI health application. However, employers should understand that guaranteed issue coverage is typically only available within the first 31 days of employee eligibility; many believe it’s available without evidence during annual enrollment, which is rarely true.
8. Dependent coverage: Spouses and children are frequently included in group life insurance coverage, but policies vary in how the carrier defines a spouse’s or child’s “insurance age.”
- In general, dependent children age out at 26. Employers should carefully read their policy to understand the definition of “age out” as it could mean the dependent’s birthday or at the policy anniversary. For spouses, the main difference is whether the insurance age is based on the spouse’s own date of birth or the employee’s.
- To avoid paying premium for dependents who have aged out, employers should frequently audit the insurance age of covered dependents.
9. Enrollment maintenance: Enrollment practices are determined by each carrier, but a few best practices will help ensure that enrollment goes smoothly.
- Ensure enrollment forms are fully completed for each covered employee. Forms should include the benefit amount and beneficiary information, and they must be signed and dated.
- It’s a good idea to keep all enrollment forms—or at least copies of them—in a secure location. They’re a good reference to ensure payroll deductions are being taken based on earnings as defined in the policy, and will be needed for beneficiary information at the time of claim.
10. Claim submission: After enrollment, the most important role employers play is verifying information when there is a claim.
- Employers must understand their policy’s definition of “earnings.” If the policy’s death benefit is based on earnings, they may inadvertently use the wrong date or include earnings that should not be used in the calculation—like tips, commissions, bonuses, etc.
- To help reduce delays at the time of claim, employers should make sure there isn’t any missing information or documents. Some frequently forgotten items include:
- Proof of contributory enrollment
- Policyholder statement
- Beneficiary designation
- Death certificates
- Beneficiary statements
Want to share this with your clients? Check out our Inside Track educational paper: 10 aspects of group life administration that all employers should understand >