Insurance and Disability Benefits: Utah
Federal law and guidance on this subject should be reviewed together with this section.
Author: Gloria Ju
- Utah employers are not required to provide life insurance benefits. If life insurance benefits are provided, certain requirements must be met. See Group Life Insurance.
- If a Utah employer offers group life insurance, premiums for the policies may be paid from different sources. See Employer Contribution and Coverage Requirements.
- Employees are entitled to a minimum grace period for paying premiums, except the first. See Grace Period.
- Group life insurance policies may be converted to individual policies under some circumstances. See Conversion Rights.
- Group life insurance may continue for a limited time during an employee's total disability. See Continuation of Coverage.
Group Life Insurance
In Utah, employers are not required to provide employees with life insurance benefits. If an employer chooses to provide life insurance as a benefit, certain requirements apply.
Employer Contribution and Coverage Requirements
An employer's group life insurance policy must cover all of the employer's employees, or all of any class of employees. +Utah Code Ann. § 31A-22-502(3)(a).
For affiliated corporations, proprietorships or partnerships under common control, employees may include:
- Retired employees; and
- Individual proprietors or partners.
+Utah Code Ann. § 31A-22-502(1)(a)(i).
A policy issued to insure the employees of a public body may include elected or appointed officials. +Utah Code Ann. § 31A-22-502(3)(b).
The premiums may be paid from any of the following:
- The employer's funds;
- Funds contributed by the insured employees; or
If employer funds pay the entire premium, then the policy must insure all eligible employees, except those who cannot provide satisfactory evidence of individual insurability. +Utah Code Ann. § 31A-22-502(5).
Group coverage may be extended to insure employees against loss due to the death of their spouse and dependent children. +Utah Code Ann. § 31A-22-511.
Group life insurance policies must include a 31-day grace period for premium payments, except the first, during which the death benefit coverage will continue in force unless the policy-holder gives written, advance notice of discontinuance under the terms of the policy. +Utah Code Ann. § 31A-22-513.
Once an insured individual has maintained a life insurance policy for two years, an insurer may only contest the policy for nonpayment of premiums. When contesting the validity of the insurance, the insurer is prohibited from using statements made by the insured relating to his or her insurability, unless the statement is in writing and signed by the insured. +Utah Code Ann. § 31A-22-514.
Employees who lose eligibility for their employer's group life insurance policy must have the option to convert the policy to an individual life insurance policy. The employee will generally be entitled to conversion without evidence of insurability as long as the employee properly initiates the conversion.
An employee may lose eligibility due to termination of employment or termination of membership in the eligible classes. The employee may convert only the life insurance policy, not any accident, health or other supplementary benefits. The individual policy amount may not exceed the amount of the current group policy less the amount of any life insurance for which the employee is or becomes eligible under any group policy within 30 days of the termination of the current group policy. +Utah Code Ann. § 31A-22-517(1); +Utah Code Ann. § 31A-22-517(2); +Utah Code Ann. § 31A-22-517(3); +Utah Code Ann. § 31A-22-517(4).
Conversion rights are also available to:
- A surviving covered dependent who loses coverage because of a covered employee's death; and
- A covered dependent who loses coverage (while the covered employee remains insured) because he or she is no longer a qualified dependent under the group policy.
An employee who loses coverage because the policy is terminated or amended is entitled to convert the group policy into an individual life insurance policy if the employee had the current group policy for at least five years. The amount of the individual policy may not exceed the lesser of:
- The amount of the current group policy less the amount of any life insurance for which the employee is or becomes eligible under any group policy within 30 days of the termination of the current group policy; or
If a covered employee dies during the period the employee was entitled to convert to an individual policy and before the individual policy becomes effective, the amount of life insurance to which the employee would have been entitled to have issued to him or her is payable as a claim under the group policy. The claim is payable regardless of whether or not the employee applied for the individual policy or paid the first premium. +Utah Code Ann. § 31A-22-519.
Notice of Conversion Rights
Employees must be notified of their conversion rights, including the time and manner in which conversion may be made, via certificates of insurance showing coverage under a group life insurance policy. +Utah Code Ann. § 31A-22-521; see Notice of Termination.
Continuation of Coverage
An insured employee may continue coverage under a group life insurance policy during the employee's total disability. The employee must continue to make timely payments of any premium that would have been required had total disability not occurred. The continuation period lasts until the earlier of:
- Six months from the date the total disability started;
- Approval by the insurer of continuation of the coverage under any disability provision that the group insurance policy may contain; or
- The discontinuance of the group insurance policy.
If the group policy has a waiting period for an accident and health benefit, the continuation extends to the end of the waiting period, even if the group policy is otherwise discontinued. +Utah Code Ann. § 31A-22-520.
Notice of Termination
When coverage terminates, employees must be notified in writing 30 days before coverage ends that the group coverage is being terminated. This notice must also include the rights the employees have to convert coverage upon termination. +Utah Code Ann. § 31A-22-522(1).
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