My father was diagnosed with cancer (Stage IV) and he was not able to work anymore due to his disability.
After his FMLA ran out, his employment was terminated (because he wasn't able to return to work). His work said that he is welcome back anytime when he recovers, but he never recovered.
My father passed away and his work is claiming that he is not eligible for the payout from his life insurance through work because he was not employed at the time of his death. Is this true?
This is one of the biggest problems with buying life insurance through your employer. Your main life insurance should be owned privately outside of your employment. If work gives you extra, then that's a bonus, but you can't count on being employed forever, that's why you ned your own individual life insurance policy that you own outside of your work.
Since your father didn't work there at the time of his death, and he didn't convert the term life group policy coverage into his own permanent life insurance plan when he was no longer employed, there's no life insurance coverage.
Life Insurance through an employer only covers things that happen while you are employed by that employer. When your employment is terminated, life insurance through the employer also ends, unless you are given the option to pay to keep the life insurance, and you do pay to keep the insurance.
There is no free life insurance insurance. Insurance only lasts for as long as someone pays for it. The employer paid while your father worked. When he stopped working, the employer stopped paying, so the life insurance ended.
However, you may want to review the group life insurance coverage policy with your attorney or insurance agent to get a better understanding of how the specific coverage works, and if there is any way to get a payout from the employer's life insurance plan.