Omaha insurance giant ordered to change procedures, pay life insurance benefits

LINCOLN, Neb. (Nebraska Examiner) — A federal investigation found that an Omaha life insurance company had denied numerous insurance claims based on a technicality after taking premiums for years — a practice one labor official labeled “terrible.”

The United of Omaha Life Insurance Co., its parent company, Mutual of Omaha Insurance, and United’s subsidiary, Companion Life Insurance Co., were all ordered to change their policies. United, according to a press release, is reviewing denied claims that go back to 2018.

Federal investigation

An investigation by the U.S. Department of Labor found that United often accepted premiums on employee sponsored life insurance plans for years without determining if a proof of good health, or “insurability” requirement, had been satisfied.

Then, when a participant died, United would often deny claims on the grounds that the company never received the participant’s evidence of insurability.

It left beneficiaries — who believed their loved ones had life insurance — with nothing.

“This terrible practice denied grieving families life insurance benefits for which their loved ones had paid, in some cases, for many years,” said U.S. Solicitor of Labor Seema Nanda on Friday.

She said that a settlement with United of Omaha was similar to one reached with Prudential Insurance Co. in April 2023, in which it was discovered that about 200 death benefit claims had been denied.

The Department of Labor, in a press release, did not specify how many claims had been rejected by United of Omaha and how much in benefits had gone unpaid.

Company reviewing past denials

The Omaha-based company told the department that it was voluntarily reviewing insurance claims going back to 2018 to determine if benefits now should be paid.

Nanda said that the settlements ensure that benefits will not be denied based on a company’s failure to verify, on a timely basis, the insurability requirements.

Under the settlement with United of Omaha and its affiliates, they will have 90 days after receiving a participant’s first insurance premium payment to determine whether the participant has satisfied any insurability requirements.

After that period, the company cannot deny a claim for benefits for reasons related to insurability.

United of Omaha officials declined to comment when reached on Monday.

The investigation was handled by the Kansas City office of the Employee Benefits Security Administration, a wing of the Labor Department.

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