Watch out for ambiguous, or even deceptive language in communications regarding employee benefits!

A common problem we see in correspondence from insurance companies to insureds is ambiguous and misleading language. A new life insurance matter we are handling provides a perfect example:

In this case, a woman who had just been diagnosed with terminal cancer, left work and applied for and was granted disability entitlements. She was subsequently repeatedly encouraged by her former employer to sign a form in order to receive her hard-earned pension of $80,000 in a lump sum. Unbeknownst to her, when she took her pension money it allegedly triggered an early retirement which had the unintended effect of reducing her life insurance benefit from $700,000 to $77,000. Upon her passing, her son found out for the first time that by taking the pension money his mother had, according to the insurer, “elected to retire,” and that he would only get 10% of what he thought he was going to receive.

The forms she signed never used the word “retirement” or “retiree,” instead opting to use words like “separation from service” or “former associate.” To make matters worse, the insurance company sent letters for several months after her alleged retirement, indicating the life insurance benefit was still the higher amount. The insurer claimed those letters were sent in error because they did not know about the pension payout/early retirement. That argument might make sense…except for the fact that the insurance company’s name is on the deposit slip for the pension payout, and the employer who processed the payout owns the insurance company!!!

We’re still in the early stages of this dispute, but we hope to correct the error on behalf of our client.

So please, before you sign anything related to insurance or employee benefits, read it VERY carefully. And if you have any questions about what effect it might have, call Kantor & Kantor for a free consultation at 800-569-6013.

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