if you are fired illegally; what happens to your life insurance you have paid for for over 8 years?

Question

I worked as a salaried manager and paid for additional insurance. I was worngfully terminated due to workers comp. I never received anything from employer regarding life insurance policy I had paid extra for for over 8 yrs. Can they do this? Am I eligible for 1035 exchange or some type of rollover?

Answer 1

COBRA covers health insurance, which cannot be cancelled without offering it to you. As for life insurance, if it was term insurance, then it is just cancelled and there is no value to it. If it was whole life, then the amount you paid in should have a partial value, and the policy would have to either continue, or you would be able to cash it out. You should be able to ask at work. Regardless whether you have been terminated, they owe you explanations about these kinds of things. Or else contact the insurance company directly.

Answer 2

As several answerers have told you, life insurance is not an investment; most likely, this group plan was term insurance and has no cash value. Therefore, a 1035 exchange is not applicable.

HOWEVER -- the other answerers did get one thing wrong: when your group life insurance ends because your employment terminates (the cause doesn't matter), most states require the insurer to allow you to CONVERT your group coverage into an individual policy, without being underwritten. Typically, you have 31 days to elect to convert your coverage; if you are not given notice, most states require that additional time be given to you. If you still have your Group Certificate of Insurance, look for a policy provision called "Conversion Priviledge," or something of that nature.

Many insurers send the conversion paperwork directly to the ex-insured; however, by contract, there are some insurers that expect the policyholder (the employer) to send this paperwork, or to give it to the ex-employee at the exit interview.

I suggest you contact the insurer IMMEDIATELY to explore this subject, especially if you have health conditions that would prevent you from purchasing a new policy on your own.

For more information regarding your state's group conversion laws, contact your state insurance commissioner's office.

I hope this helps.

Answer 3

First it's hard to imagine that you would be fired illegally "due to workers comp". Was it the case that you were fired because you were drawing workers comp?

You are most likely an 'at will' employee, meaning that if the company doesn't want you to work for them anymore, they can fire you so long as they don't do so based on a limited number of prohibitions (like race, religion, etc.)

The fact that you were drawing workers comp benefits does not protect you from being fired for cause.....which means pretty much any reason they want to come up with, they can fire you.

If for example, you were injured and you were unable to work then they have a reason to fire you if you cannot work. Some states have some limited protections for injured workers depending on when and how the injury happened.

As far as the life insurance, you were getting a group life insurance plan (almost certainly a term policy) with the ability to buy up additional coverage, which you did.

If you are terminated in almost all cases, the coverage ends.

Remember there is no cash value to a term policy, you are only paying for protection of your loved ones if you die.

If you get fired, you lose the coverage. (There may be some insurers who will allow you to 'roll over' into another individually underwritten plan but you can just do this yourself anyway...so why bother).

Answer 4

Most life insurance provided by an employor is term insurnace and is done though group police and normally can not be transfered or moved after you leave where you work.

You should have recieved a book or pamplet on the insurance when you started.

Though Cobra you may be allowed to continue certain insurance for a period of time, but this is limited.

These insurance plans normally gain no cash value but are purely term insurance, thus they have no cash value or any rollover status.

If you were fired illegally, as part of your law suit would be to be paid for the value of these services.

Answer 5

LIFE Insurance, is like Auto and Health Insurance. It doesn't pay to anyone unless you DIE! Now if you had CASH VALUES in your life insurance, it COULD still be in FORCE, and you need to get the cash values back in POCKET! NEVER get anything but TERM, though, because you can buy good savings better than they can give you savings. LEGALLY speaking, NO insurance can SAY they are an INVESTMENT! So, THAT should tell you SOMETHING. NEVER sink your money into LIFE INSURRANCE, unless your INCOME needs protection, to pay your bills, and raise your children if you die.

Answer 6

Suzanne is absolutely correct. There should be a conversion privilege that will allow you to convert to an individual policy without evidence of insurability if done within 31 days. It will probably be quite expensive, but may be worth it. Check it out.

Answer 7

Usually all benefits cease at termination regardless. If you are reinstated they should have to make you up....

Answer 8

see a lawyer