Can an employer cancel a company paid life insurance policy and expect the employee to pay back 7 years of past premiums?

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Can an employer cancel a company paid life insurance policy and expect the employee to pay back 7 years of past premiums?

I have several different whole life insurance policies. The premiums have been being paid by my employer for more than 7 years. My wife is the beneficiary of some of the policies and my employer is the beneficiary of others. My employer now wants me to take on the payment of premiums for the policies for which my wife is the beneficiary. Making matters worse, the company is attempting to charge me for some 7 years of past premium for these policies. The company new about these policies. The outside accountant new about the policies. They now claim they did not. Can they do that?

Asked on April 27, 2011 under Employment Labor Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

IF the company is claiming that in some fashion *you* defrauded them--e.g. you gave them false information that caused them to pay the premiums; you instructed someone who reports to you to write checks for your premiums; etc.--they may be able to seek recovery. However, if they simply changed their mind, they can't. So if you can show that they either did in fact know about the deductions or had every opportunity to know, then you should have a good defense; even if the company could have or should have canceled the policy earlier, it's not your fault or liability that they ignored their opportunity to take action.

Going forward, however, unless you have an employment contract to the contrary, which specifies what benefits you receive and what you pay, the company may stop paying the premiums; there is no law that a company must pay for life insurance or maintain the same benefits forever.


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