Denied Life Insurance Claim Due to Policy Lapse? What You Need to Know
One of the most common tactics life insurance companies use to deny claims is to assert that the policyholder “allowed the policy to lapse.” This often comes as a shock to grieving families—especially when they believed the policy was current or that their loved one would have never let it lapse intentionally.
We recently resolved a $429,000.00 claim denial involving Global Atlantic Life Insurance, where the insurer had wrongfully declared a lapse. If you’re facing a similar situation, don’t assume the denial is final. In many cases, the insurer’s decision can be challenged and overturned.
What Is a Lapsed Life Insurance Policy?
When a policy “lapses,” the insurer is claiming that premium payments stopped and the coverage was terminated before the insured passed away. If the policy wasn’t in force at the time of death, the insurance company won’t pay the claim—or so they say.
But here’s the truth: whether a policy actually lapsed is often far more complicated than it seems. In many of the cases we handle, the insurer’s failure to follow legal requirements invalidates the lapse entirely.
The Grace Period: Your First Line of Protection
Most life insurance policies include a grace period—a set time (often 30 days) after a missed premium payment during which the insured can make a late payment and keep the policy active. If the insured dies during that window, the policy is still in force and the insurer must pay the claim.
Insurance companies may conveniently “forget” about this grace period or claim it ended before the death occurred. It’s crucial to verify the actual dates and demand documentation proving when the grace period began and ended.
What Life Insurance Companies Are Required to Do Before Canceling a Policy
Life insurance companies don’t get to cancel a policy quietly. Every state has strict rules they must follow when a premium is missed. If they don’t follow those procedures to the letter, the policy may still be enforceable—even if payments stopped.
Insurers are usually required to:
Send timely billing statements and premium notices
Notify the insured in writing that the policy is at risk of lapse
Explain the rights and options available to reinstate the policy
In some states, notify a third-party contact if designated by the insured
If the insurer cannot prove that it complied with these requirements, the denial may be legally invalid.
Missed a Premium? That Doesn’t Always Mean the Policy Lapsed
Life insurance companies are known to declare a policy “lapsed” even when they were at fault. Some common mistakes include:
Sending lapse notices to the wrong address
Failing to send any notice at all
Not honoring automatic payment arrangements
Refusing to reinstate a policy after a valid late payment
Misapplying premium payments to the wrong account
In many cases, the insurance company cannot produce adequate proof that they gave proper notice or followed standard procedure. When that happens, we challenge the denial and fight to enforce the payout.
Why Beneficiaries Often Win These Cases
Courts have repeatedly ruled that insurers cannot cancel a life insurance policy without strict compliance with statutory and contractual notice requirements. In other words, if the company failed to send a required lapse warning—or sent it incorrectly—they may still be on the hook for the full death benefit.
We’ve overturned denials even in cases where no payments were made for months, simply because the insurer’s documentation was lacking or flawed.
Common Situations Where Lapse-Based Denials Get Overturned
The insured died during the grace period
The insurer sent the lapse notice to the wrong address
A third-party designee (like a family member) was never notified
The insured had no prior lapse history and missed just one payment
The insurance company failed to follow its own cancellation policies
A change of address or communication breakdown led to missed notices
Never Assume a Denial for “Policy Lapse” Is the End of the Story
Insurance companies are counting on beneficiaries to accept denial letters at face value. They use complex language, cite policy clauses out of context, and often imply there’s no way to dispute the outcome. That’s simply not true.
With the help of an experienced life insurance attorney, many policy lapse denials can be reversed. In our practice, we’ve recovered hundreds of thousands of dollars for families who were initially told they had no valid claim.
If Your Life Insurance Claim Was Denied, Contact Us Immediately
If you've received a claim denial based on non-payment or policy lapse, you may still be entitled to the full benefit. Our attorneys specialize in fighting back against wrongful life insurance denials. We offer free consultations, and you pay nothing unless we recover money for you.
We’ll review your case, demand documentation from the insurance company, and take every legal step necessary to ensure your loved one’s wishes are honored.
Call us today. We’re here to help.