Do not Get Caught in a Web When Changing Group Life Carriers

There are several pitfalls to avoid when changing group life carriers. One of which, is the actively at work provision. What does actively at work mean? For most carriers, it means employees are at work and performing the regular duties of their job, in the usual way, for the usual number of hours. Employees are also considered actively at work while on a vacation day or holiday, as long as they were actively at work on the preceding work day. Employees not actively at work when the transition to the new carrier occurs, could find themselves at risk when they need the coverage the most. Fortunately, most carriers include continuity of coverage provisions in their contracts such as "no loss/no gain" in order to protect these employees.

How does "no loss/no gain" work?

Under a "no loss/no gain" provision, life insurance coverage can typically be extended to qualified employees for up to 12 months if they are out of work due to injury or sickness. If the employee returns to "actively at work" status, they generally are eligible to enroll in the new carrier's standard employee coverage.

Making the transition

As part of the implementation process, the new carrier may ask for a list of all employees who are not currently actively at work. Many times this information is reported on the master application, enrollment census or both. The new carrier will want to know who will not be actively at work on the effective date and why. A few questions that the new carrier may ask include;

  • When was the employee last actively at work?
  • Why is the employee not actively at work?
  • What is the employee's current coverage amount(s)?
  • Has premium been paid?
  • When is the employee expected to return to work?
  • Has waiver of premium been filed with the current carrier?

When making the transition to the new carrier, it is imperative that the new carrier is aware of any employees not currently actively at work and that the new carrier also offers "no loss/no gain" in their contracts. Taking the additional time to review this during the transition will help ensure that the new coverage is beneficial to all parties, including the employees who are absent.

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