Non Evidence Maximum Options and Liability Exposure
Non Evidence Maximums, (NEM), as they are known in the insurance industry, is the amount of insurance risk the insurance company will assume without requesting medical evidence. This will vary from company to company and depend on the number of employees and the amount of "base" benefit. A company can inadvertently be exposed to a large liability risk if the "optional coverage" above the NEM is not offered properly to the employee.
Long Term Disability is a good example. Let's suppose we have a basic program NEM to age 65 maximum $2000, 70% of income. Optional coverage is available to $5000 with further medical evidence. That optional coverage should be offered to each employee who would qualify for it, at least once a year. If the employee declines any optional coverage, a sign off form should be obtained. If this option issue is not handled properly, the employer could find themselves responsible for the available optional difference of $3000 a month until that person turns 65.
Late Night TV offers a continuous stream of legal information ads to educate the public about their rights. Circumstances change within companies and peoples lives that can cause "benefit controversies" in the future. Know your position.
Many companies have been found liable by the courts for failing to properly advise or offer "optional benefits" which were available in the benefit package. Don't find yourself in a that situation. The Benefit Guys recommend that if the employer is not going to put an annual checklist and sign off form for optional benefits, then perhaps removing the option would reduce that liability potential.
This applies to all insured products such as Life Insurance, Critical Illness, LTD etc.
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