Silverberg Group - Bringing Your Employee Benefits into Focus

Plan Administrator Updates – August 2017

The Importance of Retaining Signed Applications


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It happens all too often and usually in the most unfortunate circumstances — a claim is made for a life insurance benefit for an employee or their dependent and there is no trace of the application documents, severely impacting the claims settlement process.


When a claim for life insurance benefits for an employee or their dependent is made, the plan administrator must forward all of the applications and change forms on file for that employee or dependent with the claim submission. While many insurers require the original documents, in more recent years some insurers now consider scanned copies to be sufficient. In any event, these forms must be duly signed, dated and stored in a secure place, and failure to do so could severely impact the coverage provided. Beneficiary information, including the latest beneficiary change, must be retained for two years following the submission of the claim. If the insurer can’t substantiate and confirm the existence of the signed application any life insurance paid would go to the estate rather than directly to the beneficiary, which can result in costly probate fees. A beneficiary designation provides the insurer with clear instructions on how the proceeds are to be distributed. If the insurer finds itself in a position where it’s unable to establish the rightful beneficiaries (for example, if two or more persons make a claim to the same insurance proceeds) the insurer would then be forced to make the payment into the court system – a process that can be both costly and time-consuming. In general, the insurer also reserves the right to conduct on-site audits to verify the existence and integrity of any application or change form submitted online, and may request that the application or change form be forwarded to them at any time.

Plan Administrator Review


As we approach September plan administrators should take some time to complete their annual over-age dependent update. Once a dependent child reaches the age of 21 (or 22 depending on your insurance company), insurance carriers generally terminate them as eligible dependents for Dependent Life, Health and/or Dental benefits. Coverage can be continued if they are enrolled in an accredited educational institution, college or university as a student, on a full-time basis.

Plan administrators should also review their employees’ data records to make sure they are up to date. One important update is to confirm that plan members’ annual earnings are current. Income based benefit payments are determined by each plan member’s salary so it’s very important that these earnings are updated on a regular basis. Otherwise plan members’ benefit payments may not be based on the correct salary.

In addition to beneficiary information, plan administrators should ensure that things like address changes and coordination of benefits information is current. Should something unfortunate happen we cannot stress enough the importance of having this information completed and up to date.

It is important to note that the enrollment & eligibility of students varies depending on your insurance carrier. Some require paperwork, which takes time to process, so make sure to contact your insurer, or Silverberg Account Manager, for the process specific to your carrier before classes resume.

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