I have an employee who is not currently actively on work. He is on disability and it is likely the illness will be fatal. I understand that the disability coverage goes with the insurer, so as long as the employee is not actively at work, the current insurer is responsible for disability claims even if we switch carriers.

How about for life insurance. I ask because we will be required to make a change in life insurers because size limitations will require us to shift. Is the prior life insurer still on the hook as long as the employee does not return to work?

Joe:
Check the current life policy to see if there is a disability waiver of premium provision. If there is, the employee who is on disability may be covered by the current life policy provided he is considered by the insurer to be totally disabled at death.
Read these provisions and you should find the answer.

Joe,
To emphasize a point that Kip suggested, the employee has to file a claim with the insurance company for waiver of premium. Also, pay attention to the deadlines in the policy for claim submission - some carriers are sticklers for them, especially when they're about to be cancelled.

In addition to waiver of premium, check the policy for an accelerated death benefit, where terminally ill employees can get some cash out of their life insurance.

I ran into this a couple of years ago with an ee who had had a heart attack and was disabled while we switched carriers. We had no PW provision for disability.

What we ended up doing was picking up the conversion option to a private policy. It's expensive - - very expensive - - but it's guaranteed issue.