Insurance and Disability Benefits: Virginia
Federal law and guidance on this subject should be reviewed together with this section.
Author: Gloria Ju
- Virginia 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 Virginia 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
In Virginia, 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
A group life insurance policy must cover at least two individuals, other than spouses or minor children, when the policy is issued and at each policy anniversary date. +Va. Code Ann. § 38.2-3322.2.
An employer's group policy must cover all of the employer's employees, or all of any class or classes of employees. A policy may, but is not required to, define eligible employees to include:
- Employees of subsidiary corporations;
- Employees, individual proprietors and partners of affiliated corporations, proprietorships or partnerships that are under common control with the employer;
- The individual proprietor or partners if the employer is an individual proprietorship or partnership;
- Retired employees, former employees and directors of a corporate employer; and
- Elected or appointed officials under a policy issued to insure the employees of a public body.
+Va. Code Ann. § 38.2-3318.1(A)(1).
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 reject the coverage in writing or who cannot provide satisfactory evidence of individual insurability. +Va. Code Ann. § 38.2-3318.1(A)(2); +Va. Code Ann. § 38.2-3318.1(A)(3).
Group life insurance may be extended to cover:
- A spouse;
- A child who is under 19 years of age;
- A child who is under 25 years of age and is a dependent and a full-time student;
- A child who cannot work due to an intellectual or physical disability and who is chiefly dependent on the employee for support and maintenance;
- Any class of spouses and dependent children; and
- A person in whom the employee has an insurable interest (in the case of individuals related closely by blood or by law, a substantial interest engendered by love and affection).
Virginia passed the Small Business Insurance Parity Act II in 2010, which allows employers to offer group life insurance benefits to employees' domestic partners.
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. +Va. Code Ann. § 38.2-3325.
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. +Va. Code Ann. § 38.2-3326.
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 class or classes. The employee may convert only the life insurance policy, not any disability 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 31 days of the termination of the current group policy. +Va. Code Ann. § 38.2-3332.
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 31 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. +Va. Code Ann. § 38.2-3334.
Conversion rights are also available to:
- An employee's spouse and children;
- 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 family member under the group policy.
There are no developments to report at this time. Continue to check XpertHR regularly for the latest information on this and other topics.