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Death Benefits
A death benefit is a lump-sum payment acquired by surviving family members upon the death of a relative. It can be guaranteed in an employment or insurance contract, or by the government.
In a recent case, plaintiffs sued over being denied their employee death benefits when a subsidiary of AT&T took over and cancelled them. The contract expressly stated that the death benefit “shall be paid,” and the Employment Retirement Income Security Act (ERISA) prevents spin-off companies from cutting back on pension benefits. However, the court ruled that death benefits are “welfare” benefits, not “pension” benefits, because the benefit only arises upon death, not at normal retirement age. Therefore, the spin-off company could legally terminate AT&T’s death benefits.
In addition to employee death benefits, there are numerous government programs entitling family members to death benefits. For example, social security pays $225 to eligible beneficiaries. Survivors of veterans are entitled to lump sum payments of various amounts depending on the veteran’s status, i.e., active duty or retired. Funeral and burial expenses for veterans are also paid for.
Other government workers, such as railroad and postal workers, are entitled to lump-sum payments upon their death. Some states provide death benefits to survivors of victims of certain crimes. The state also provides death benefits to the families of welfare recipients. Death benefits include the proceeds of life and casualty insurance.
If death benefits are denied, attorneys and their clients can file a lawsuit for breach of contract. Companies failing to pay out the contracted-for death benefit will be held responsible for the correct amount due plus interest. Companies withholding payment to unsophisticated clients willfully and in bad faith could be sanctioned with punitive damages.
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