Can my employer provided life insurance company legally refuse to increase my spouse’s coverage due to breast cancer?

A while back, my employer provided life insurance offered the option for additional coverage on employee spouses to equal that of the employee I filled out the necessary paperwork truthfully and sent it to the insurance company. A few weeks later, we received a denial from them, based on the fact that she had been diagnosed with breast cancer. She elected to have the breast removed, was given 3 precautionary rounds of chemo and, for all intensive purposes, was considered to be cancer free. This information was shared with the insurance company via the paperwork. Is this legal or discrimination? If legal, why are they allowed to get away with this?

Asked on May 22, 2018 under Insurance Law, Tennessee

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

It is legal because life insurance, unlike health insurance, is not barred by law from considering pre-existing conditions or health risks. In fact, eligility for insurance (and how much insurance they will sell you, and the premiums you pay) is explicitly based on the would-be insured's health. Insurers sell insurance not as a public service, but to make money: that means they can refuse to cover if they well the risk of actually having to pay out is too high. Cancer is a valid reason to not increase someone's insurance, especially since even people in remission have a higher rate of cancer (of relapse, or cancer in another body part) than people who have never been diagnosed with cancer. Given that higher risk, creating a higher likelihood of payout, they are allowed to decline additional coverage.


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