Radnor, PA — The U.S. Department of Labor has announced a significant settlement with Lincoln National Life Insurance Co., mandating reforms to its evidence of insurability practices for participants in employer-sponsored life insurance plans. This settlement prohibits Lincoln from denying insurance claims based on the absence of evidence of insurability once premiums have been paid for three months or more.
The settlement follows an investigation by the Department’s Employee Benefits Security Administration (EBSA), which revealed instances where Lincoln accepted premiums over extended periods without requiring proof of good health from participants. Subsequently, when beneficiaries filed claims after the death of plan participants, Lincoln denied these claims citing the lack of evidence of insurability, thereby denying beneficiaries rightful insurance benefits.
Lisa M. Gomez, Assistant Secretary for EBSA, emphasized the importance of companies fulfilling their obligations promptly: “Workers expect that their premiums ensure they receive promised benefits. Once premiums are paid, life insurance companies must promptly verify eligibility requirements. EBSA will not tolerate companies neglecting this responsibility, collecting premiums for extended periods, and then denying benefits to beneficiaries.”
As part of the settlement, Lincoln is now restricted to requesting evidence of insurability from participants within the first year of premium payment. Additionally, any health conditions arising after Lincoln’s initial premium receipt date cannot be considered in eligibility determinations. These reforms apply not only to Lincoln National Life Insurance Co. but also to its parent company, Lincoln National Corp. of Radnor, and subsidiary Lincoln Life & Annuity Co. of New York.
Lincoln has informed the Department that it voluntarily reviewed and reprocessed claims dating back to March 2018, aiming to rectify instances where claims were denied solely due to participants failing to provide evidence of insurability.
This settlement aligns with previous agreements reached by the Department with other insurance providers, including United of Omaha Life Insurance Co. in September 2023, Prudential Insurance Co. in April 2023, and Unum Life Insurance Co. of America in May 2024.
Lincoln Financial Group, encompassing Lincoln National Corp. and its affiliates, serves approximately 17 million customers across annuities, life insurance, group protection, and retirement plan services as of December 31, 2023.
Attorney Dana M. Hague of the Department’s Office of the Solicitor in Kansas City, Missouri, negotiated this settlement, with investigations led by EBSA’s Kansas City and Philadelphia Offices.
