Life Insurance Lapse: Denied CLaims

Life insurance policies can lapse if premiums are not paid, but the process surrounding these lapses is complex and subject to specific legal requirements. If your life insurance policy has lapsed due to missed premiums, you may still be entitled to benefits if the insurer failed to follow proper procedures. Experienced lapse attorneys can help you challenge unfair denials and secure the benefits you and your family deserve.

What Causes a Life Insurance Lapse?

Life insurance policies can lapse for several reasons, with the most common being non-payment of premiums. Insurers like American General, MetLife, and AARP may claim a policy was canceled due to missed payments, but the laws governing such lapses are intricate. Insurance companies are required to update their contracts and practices to comply with evolving regulations, but many fail to do so.

Insurers are legally obligated to notify policyholders about impending lapses, and failing to do so can be grounds for challenging a claim denial. Common errors include:

Failure to send cancellation notices to the correct address.
Not updating policyholders about changes in procedures or payment requirements.
Neglecting to send premium-due notices in a timely manner.

These errors may be uncovered during the appeal process, and if an insurer is found liable, you may be entitled to a payout despite the lapse.

The Role of Grace and Reinstatement Periods

Many life insurance policies offer a grace period following a missed premium payment. During this period, coverage remains in effect, giving the policyholder time to make the payment and restore their coverage. Typically, insurers like Reliance Standard, Transamerica, and Banner provide a 31-day grace period.

After the grace period expires, some insurers allow a reinstatement period, during which the policyholder can restore coverage by paying past-due premiums and undergoing health evaluations. The Hartford, Jackson Life, and MetLife may offer a reinstatement period of up to five years, depending on the insurer’s rules.

However, insurers often try to deny claims based on policy lapses. They may argue that the policyholder failed to pay within the grace period or reinstatement period, even if the insurer failed to follow proper procedures.

Challenging a Life Insurance Lapse Claim Denial

If a claim is denied due to a lapsed policy, it’s essential to seek the assistance of an attorney specializing in life insurance law. Depending on the jurisdiction, beneficiaries may be able to contest the cancellation if the insurance company failed to notify the policyholder correctly or didn’t follow proper cancellation procedures.

Insurance companies like Prudential, Sagicor, and State Farm may count on the lack of knowledge among policyholders and beneficiaries to avoid paying claims. By hiring a lawyer with experience in life insurance lapses, you can ensure that your claim is thoroughly investigated, and any wrongful denials are challenged.

What to Do If You Miss a Premium Payment

While life can sometimes lead to missed payments, it’s important to understand the options available to policyholders to prevent the loss of life insurance benefits. Here’s what to do if you miss a payment:

Understand Grace Periods: Many policies offer a 30-day grace period where the insurer will still honor the claim, even if the premium is overdue. If the policyholder dies during this period, the insurance company is typically required to pay the beneficiary.
Reinstatement Options: After the grace period, most insurers provide a reinstatement period where policyholders can restore coverage. However, insurers may require health questionnaires or medical exams, and if the policyholder’s health has deteriorated, reinstatement may be denied or result in higher premiums.
Appealing Denied Claims: If a policyholder dies during the reinstatement period, or if a claim is denied due to missed payments, it’s important to seek legal advice. Lawyers specializing in life insurance denials can help you assess whether the insurer followed proper procedures and, if not, may be able to overturn the denial.

Why Hire a Life Insurance Attorney for a Lapse Claim?

If your life insurance policy lapsed due to missed payments and a claim has been denied, a life insurance attorney can help you understand your legal options. Life insurance attorneys are well-versed in the complex rules surrounding lapses, grace periods, and reinstatements and can guide you through the process of challenging an unfair denial.

Insurance companies such as AAA, Ameritas, and Globe may deny claims, even when they are within the grace period, counting on the lack of knowledge from beneficiaries. A lawyer can help ensure that you are treated fairly and that your claim is thoroughly reviewed.

Understanding Your Rights as a Beneficiary

As a beneficiary, you have the right to contest a denied life insurance claim if the insurer failed to meet the required procedures for notifying policyholders about lapses. If your loved one’s policy lapsed, but the insurer did not follow the correct protocols for notification, you may still be entitled to the death benefit.

By consulting with a life insurance attorney, you can gain peace of mind and the support needed to pursue a rightful claim. Our team offers free consultations to evaluate your case and provide an honest assessment of your options. No fees unless we recover your claim—we are committed to securing the benefits you deserve.

In Conclusion: Protect Your Life Insurance Benefits

Life insurance is meant to provide crucial financial support to your loved ones after your passing. However, when policies lapse due to missed payments, navigating the appeal process can be complex. With the help of a life insurance attorney, you can challenge unfair claim denials, and ensure that the insurance company is held accountable for any failure to follow proper procedures.

If you’re dealing with a lapsed life insurance policy or have had your claim denied, reach out to us for a free consultation. We have the experience to handle your case and will fight to secure the benefits that are rightfully owed to you.

Cases

Case 1: Contesting a Denied Life Insurance Claim Due to Lapse After a Missed Payment

Ms. Eldora, the widow of Mr. Salazar, was stunned when her life insurance claim was denied after his sudden passing. Mr. Salazar had held a life insurance policy for over 15 years, and Ms. Eldora was certain that he had made his last payment just before he passed away. However, the insurer denied the claim, citing a policy lapse due to a missed premium payment several months prior to his death.

The insurer claimed that Mr. Salazar had failed to make a premium payment on the policy’s renewal date, and as a result, the coverage had lapsed. Ms. Eldora knew that her husband had always been diligent about making his payments on time, and she suspected that an error or miscommunication had occurred.

Upon reviewing the situation, we discovered that Mr. Salazar had made the premium payment on the day it was due, but the insurer had incorrectly processed the payment due to a technical error in their system. We gathered evidence showing that the payment had been sent, including bank statements and communication logs, which demonstrated that Mr. Salazar had acted in good faith.

We filed an appeal, providing proof that the insurer’s failure to process the payment was the sole cause of the lapse. The insurer reexamined the evidence and ultimately reversed the denial, allowing Ms. Eldora to receive the full death benefit. This case underscores the importance of ensuring insurers correctly process payments and the value of providing clear documentation when disputes arise.

Case 2: Overturning a Denied Life Insurance Claim Due to Lapse from Automatic Payment Failure

Mr. Quinton, a federal employee, had enrolled in a life insurance policy with automatic premium payments, meaning that his premiums were supposed to be automatically deducted from his bank account each month. However, when Mr. Quinton passed away unexpectedly, his wife, Mrs. Quinton, was informed that the insurer had denied the claim due to a policy lapse caused by missed payments.

The insurer argued that the automatic payment plan had failed due to insufficient funds in Mr. Quinton's bank account on several occasions, leading to the policy lapse. Mrs. Quinton was devastated, as she knew her husband had maintained a healthy bank account balance and had never mentioned any issues with the automatic payments.

We investigated the situation and found that the automatic payment system had been improperly set up by the insurer, causing multiple failed payment attempts even though the funds were available in Mr. Quinton’s account. Additionally, we discovered that the insurer had never notified Mr. Quinton of the failed payments, nor did they provide him with an opportunity to rectify the situation before the policy lapsed.

We filed an appeal, providing evidence of the insurer’s mistake, including bank statements, communication logs, and a detailed history of failed payment attempts. After reviewing the case, the insurer acknowledged the error and reinstated the policy, paying out the full life insurance benefit to Mrs. Quinton. This case highlights the importance of ensuring that automatic payment systems are properly set up and that insurers notify policyholders of any payment issues promptly.

Case 3: Challenging a Denied Life Insurance Claim Due to Lapse After Address Change

Ms. Vivienne, the daughter of Mr. Callahan, was shocked when the life insurance claim for her late father was denied due to a lapse in coverage. Mr. Callahan had held a life insurance policy for over 30 years, and Ms. Vivienne was confident that he had always maintained his payments. The insurer, however, claimed that his coverage had lapsed due to missed payments following an address change.

According to the insurer, Mr. Callahan had not received his premium renewal notices after moving to a new home, and because the payments were not received, the policy had lapsed. Ms. Vivienne knew that her father had been extremely meticulous about keeping his address up to date with all relevant parties, including the insurance company.

Upon further investigation, we discovered that the insurer had failed to update their records with Mr. Callahan’s new address after his move. The insurance company had sent renewal notices to his old address, and when Mr. Callahan didn’t receive them, he was unaware that his payment was due. We found that the insurer had neglected to properly update their contact information, even though Mr. Callahan had notified them of the change well in advance.

We filed an appeal, providing proof of Mr. Callahan’s address change and evidence that the insurer had failed to properly update their records. After a thorough review, the insurer reversed the denial and paid out the full life insurance benefit to Ms. Vivienne. This case demonstrates the importance of ensuring insurers update contact information and notify policyholders of any lapses in coverage.

Case 4: Contesting a Denied Life Insurance Claim Due to Lapse From Miscommunication on Payment Dates

Mrs. Amira, the widow of Mr. Jean-Luc, was devastated when her claim for his life insurance policy was denied due to a lapse in coverage. The insurer argued that the policy had lapsed because Mr. Jean-Luc had missed a premium payment, and they claimed that he had not paid the premium on time. Mrs. Amira knew her husband had been diligent about paying his premiums and was certain that he had made the last payment on schedule.

Upon investigating the situation, we found that the insurer had miscommunicated the due date for the premium payments. Mr. Jean-Luc had been under the impression that the payment was due at the end of the month, but the insurer had set a different due date at the beginning of the month. The insurer had failed to properly inform Mr. Jean-Luc of the change in the payment schedule, leading to the unfortunate lapse.

We filed an appeal, presenting documentation of the miscommunication, including emails and letters from the insurer, as well as evidence that Mr. Jean-Luc had paid all premiums on time based on the incorrect due date. After reviewing the evidence, the insurer acknowledged their error and approved the claim, providing Mrs. Amira with the full life insurance benefit. This case highlights the importance of clear communication from insurers regarding payment schedules and the need for proper notice when changes occur.

Case 5: Overturning a Denied Life Insurance Claim Due to Lapse After Bank Account Closure

Mr. Carmichael, a retiree, had a life insurance policy through his former employer. After his death, his wife, Mrs. Carmichael, filed a claim for the life insurance benefits, only to be informed that the insurer had denied the claim due to a policy lapse caused by missed payments. The insurer claimed that the missed payments resulted from a closed bank account, which Mr. Carmichael had not updated in their records.

Mrs. Carmichael was baffled by the decision, as her husband had always been meticulous about keeping his records up to date. We investigated the matter and found that Mr. Carmichael had indeed updated his bank account details with the insurer after his original account was closed. However, the insurer had failed to process the change in bank account information, leading them to continue attempting withdrawals from the closed account.

We provided the insurer with proof that Mr. Carmichael had submitted the updated bank account information, along with documentation showing that the insurer had failed to properly update their records. We also pointed out that the insurer had not sent any notice or reminders about the payment issues, leaving Mr. Carmichael unaware of the lapse in coverage.

After reviewing the evidence, the insurer reversed the decision and paid out the full life insurance benefit to Mrs. Carmichael. This case illustrates how important it is to ensure that insurance companies process changes to bank account information promptly and notify policyholders of any issues related to payments.

Written by: Attorney Christian Lassen, founder of Lassen Law Firm, a national leader in handling life insurance claims, having secured hundreds of millions in settlements for clients nationwide. With 24 years of experience, Mr. Lassen specializes in resolving delayed and denied life insurance claims. He is a certified life member of the Million Dollar Advocates Forum and Multi-Million Dollar Advocates Forum, recognition given only to attorneys who have won million- and multi-million-dollar verdicts and settlements. A top 1% lawyer in the U.S., Mr. Lassen is dedicated to both his clients and community, supporting various charities, especially those focused on children with cancer.

Sources

Life insurance claims are often denied if the policy lapsed before the insured’s death—usually from missed premium payments. The NAIC explains that insurers must provide proper notice before canceling a policy, including a grace period for payment. According to the Insurance Information Institute, lapses are one of the most common reasons for denial, especially in individual policies.