A Blog by Jonathan Low

 

Nov 18, 2021

Some Companies Denying Life Insurance Benefits To Unvaccinated Who Die

Nothing personal or political, it's just business. JL 

Ronda Lee reports in Business Insider:

In the US, some employers are considering denying death benefits from life insurance to unvaccinated employees who die from COVID. Most employer-provided plans have strict guidelines for eligibility and those requirements can change if the employer deems it unsafe for the work environment. For those who choose to be unvaccinated, it is important to understand restrictions on employer-provided benefits because employer-provided benefits expire when you resign, retire, or are terminated.

As more contagious variants of COVID emerge, countries are seeking to curb a resurgence in cases. NPR reported that some countries like the Netherlands and Denmark are considering lockdowns, while Austria imposed a lockdown for those who aren't fully vaccinated. Singapore, meanwhile, will stop covering the medical bills of unvaccinated patients.

In the US, President Joseph Biden's federal vaccine mandate has received resistance and was temporarily blocked. Meanwhile, some employers, like New York's MTA, are considering denying death benefits from life insurance to unvaccinated employees who die from COVID.

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Unvaccinated employees may lose AD&D death benefits

Echo Huang, founder of Echo Wealth Management, said that it seems like current developments are directed towards employees in "dangerous" jobs and would impact accidental death and dismemberment (AD&D) benefits provided by employers.

Huang said that most employer-provided AD&D plans have strict guidelines for eligibility and those requirements can change if the employer deems it unsafe for the work environment. 

According to Kaiser Health, in the instance of NYC MTA workers, as a result of the coronavirus pandemic, "transit officials and the labor unions representing employees reached agreements that workers who died of COVID-19 would be eligible to receive a $500,000 lump-sum death benefit, just like payments to which families of MTA workers who have other job-related deaths are entitled."

The program was at the beginning of the pandemic when a vaccine didn't exist. When the FDA approved COVID vaccines, "the MTA Board determined that, starting June 1, workers who died of COVID had to have been vaccinated for their families to be eligible for the payment."

Huang said that although AD&D is a nice benefit, it shouldn't be a person's only insurance. She generally recommends that if clients have employer-provided group life insurance benefits that they combine it with an individual life insurance policy.

With open enrollment, unvaccinated employees need to review their options

Huang said with open enrollment season upon us, it is important that employees understand the terms of group life and AD&D policies that are employer-provided. However, employees shouldn't neglect having their own individual life insurance coverage.

For those who choose to be unvaccinated, it is important to understand restrictions on employer-provided benefits. Because employer-provided benefits expire when you resign, retire, or are terminated, it is important to have individual life insurance coverage.

What is group life and AD&D insurance?

Group life insurance is a term life policy offered by employers to employees that is considered a guaranteed issue. That means that all employees are accepted.

Accidental death and dismemberment life insurance (AD&D) pays a cash benefit for accidental death or loss of limbs, hearing, sight, or speech due to an accident. Death or injury must occur as a direct result of an accident and typically doesn't include death by a disease like COVID. It's a no medical exam life insurance plan that has guaranteed acceptance, meaning your application will definitely be approved.

Employers usually provide two types of life insurance for employees: (1) term life insurance and (2) accidental death and dismemberment (AD&D)

The insurance provider for group life is usually a large insurance carrier. If you die while employed and you enrolled in your employer-provided group life insurance, your beneficiary will receive your death benefit.

One disadvantage of employer-provided group life and AD&D insurance is that if you leave your job (you resign, retire, or are terminated), you lose coverage. You cannot take the coverage with you, no matter how or when you leave.

Another disadvantage is that if group life insurance is your sole coverage, it may not be enough. For an individual life insurance policy, you typically select 10 times your annual income as your death benefit. For example, if you make $75,000 per year, you would purchase a life insurance policy for $750,000. A group life insurance policy may not offer 10 times your salary in coverage — so your employer coverage may not be enough

AD&D vs. group life insurance

Just like employer-provided group life insurance, you lose those group AD&D if you retire, resign, or are terminated from your job. Additionally, AD&D has restrictions on payouts.

 Group lifeGroup AD&D
ExpiresWhen you retire, resign or are terminatedWhen you retire, resign or are terminated
Death benefitsYesYes
ExclusionsGenerally none (check policy)Excludes death by: suicide, surgery, physical/mental illness, bacterial infection, hernia, car racing, drunk driving, war, sky diving, drug overdose

Things to consider if you are buying individual life and AD&D policies

You can purchase individual life and AD&D insurance policies. However, it is important to understand the differences. First, AD&D is not traditional life insurance. If you only have AD&D and do not die from an accident, your beneficiaries receive nothing. Also, AD&D does not pay out if you die from exclusions.

Second, there are two types of traditional life insurance: permanent life and term life. There are various term life products and permanent life products. If you have term or perm life insurance, your beneficiaries receive a death benefit regardless of how you die.

Lastly, your life insurance needs change as you age, and you'll need to consider childrenmarriagedivorce, retirement, and caring for aging parents. If you are in a dangerous job or trade, maybe you need AD&D, but most people don't. That is why it is you should consult a financial advisor, estates attorney, and accountant to ensure you have the proper coverage for your goals and life changes.

 Individual AD&DIndividual term lifeIndividual perm life
ExpiresAfter set time (5, 10, 15, 20, or 30 years)After set time (5, 10, 15, 20, or 30 years)Lasts your lifetime
Covers death by any cause (disease, suicide, murder, natural, etc)NoYesYes
Covers loss of limbs, sight, hearing, or speech due to injury or accidentYesNoNo
Death benefitYes*YesYes
Cash valueNoNoYes
ExclusionsExcludes death by: suicide, surgery, physical/mental illness, bacterial infection, hernia, car racing, drunk driving, war, sky diving, drug overdoseIf guaranteed or simplified no medical exam life insurance there may be a two year waiting periodNo

*If death is by covered accident

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