The Labor Department has announced a settlement with Prudential Insurance Co. over allegations that the company did not pay more than 200 beneficiaries because the insured people failed to provide "evidence of insurability" when they applied for life insurance. Each claim varies, up to a maximum limit of $500,000, but Prudential will pay a total of $7 million to these grieving families.

In announcing the settlement, the department said that parallel investigations have found that other insurers engaged in similar practices. And department officials warned that group policyholders, such as employers, may be held liable if they failed to give notice to the participants that Prudential had not approved their evidence of insurability.

"This egregious practice left grieving families without the life insurance for which their loved ones had paid, in some cases, for many years," Solicitor of Labor Seema Nanda said. She added, "We would urge all insurers to examine their practices to ensure that they aren't engaged in similar conduct."