A Plano, Texas school teacher died last year. Robert “Boots” Williams lost his battle with lung cancer thinking he’d done everything required of him to take care of his wife and disabled son. He reported to school to teach in late August but barely made it through the first day. Since he wasn’t feeling well, he used his sick time while going through treatment.
Boots and his son in law, Mike Bibb, met with the Plano school district’s HR department to make sure everything was in order on the new life policy on September 1. Unfortunately, the HR department didn’t have a copy of the policy and thought he was covered. Had they had a copy of the policy the HR representative would have known, Boots would need to work one day on or after September 1 in order for the life to go into effect on him. He died 13 days later having never worked in the month of September.
Since the new policy with Sun Life didn’t go into effect, his wife and son did not collect the $250,000 life payment he’d set up. The Plano school district did help coordinate the collection of a $50,000 policy from the life carrier who’d been replaced which helps, but it’s a long way from $250,000.
Most people want to find fault with either Sun Life, the new life company, or with the Plano Independent School District’s human resources department for providing incorrect guidance. That said, we can poke holes in that argument due to;
- No insurance company pays a claim on a policy that hasn’t gone into effect yet when a condition for it to go into effect hasn’t been met.
- It’s truly up to the insurance company, not the employer to verify coverage and anything that would disallow coverage.
So what does this mean for each of us? Here are five “takeaways,”
- No HR professional is a life or health insurance agent
- Always confirm coverage with the insurance company and know the restrictions prior to acting on any decision (this goes with health coverage too!)
- Max out the company life coverage (since it’s a group policy, this is cheap insurance) but don’t rely on it (it’s the “icing”)
- Rely instead on your own life policy so you don’t get caught short, either through a layoff or some other action beyond your control (this is the “cake”)
- Get your life policy when you’re in your 20’s or 30’s – it costs less and you have less to worry about as far as any conditions that could increase the cost of coverage or deny it
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