How Administrative Errors Lead to Invalid Lapses
Insurers rely on systems and personnel to manage millions of active policies. That means human error and system glitches are inevitable. These are some of the most common administrative failures that cause wrongful lapse denials:
Incorrect Data Entry: A staff member entering the wrong payment date or amount can cause the system to flag a valid policy as unpaid.
Mailing Errors: Insurers are legally obligated to send lapse notices, often via certified or first-class mail. If those notices are sent to an old address, or not sent at all, the policyholder may never be aware the policy is in jeopardy.
Failed Auto-Pay Transactions: Many policyholders set up automatic bank drafts to avoid missing a payment. If the bank changes, the card expires, or the transaction fails without notice, the insurer may cancel the policy—even when the intent to pay was clearly there.
Inadequate Notification: Some insurers fail to follow up when payments are missed. Modern standards often require multiple forms of communication—such as phone calls, emails, and mail—to ensure the insured is aware of a problem. A single, missed notice may not meet the legal burden of notification.
Failure to Comply With State Laws: In many states, life insurance companies must notify not only the policyholder, but also a secondary contact or designee before canceling coverage. If this legal requirement is ignored, the lapse may be considered void.
Who’s Responsible? Insurer and Policyholder Obligations
While policyholders are expected to pay premiums on time and keep their contact information current, insurers have equally important obligations. They must maintain accurate billing systems, provide timely notice of missed payments, and honor grace periods. Courts have ruled that if an insurer fails in these duties—such as by sending a single confusing notice or not warning the policyholder of cancellation—their denial of a claim can constitute bad faith. Legal precedent has shown that insurance companies cannot benefit from their own mistakes.
We Fight—and Win—Lapsed Life Insurance Denials
Our law firm has successfully overturned claim denials from major insurers such as MetLife, Prudential, Lincoln Financial, and many others based on alleged lapse. In one case, we proved that a client’s bank changed routing numbers, causing auto-pay to fail. The insurer canceled the policy without notifying the policyholder, and then denied a $250,000 claim. We argued the lapse was invalid due to inadequate notice and the claim was paid in full. These are not isolated incidents. Insurers often deny lapse-related claims hoping beneficiaries won’t push back. But we do—and we win.
What To Do If Your Claim Was Denied for Lapse
Do not take the insurer’s word at face value. A life insurance attorney can:
Investigate the full payment history and lapse timeline
Demand internal insurer correspondence and system logs
Determine whether the required lapse notice was properly issued
Evaluate whether state law notice requirements were followed
File legal action if the insurer acted in bad faith or violated policy terms
Many families are surprised to learn that the lapse the insurer cited was entirely avoidable or legally invalid. With legal help, they recovered the benefits their loved one paid for—and intended for them to receive.
Contact Us Today If Your Claim Was Denied Due to a Lapsed Policy
Whether your claim involves MetLife, Prudential, Guardian Life, AIG, or another insurer, we’re here to help. If you received a denial letter claiming your loved one’s policy lapsed, contact our team. We’ll review the denial, investigate the lapse, and fight for the payout your family deserves. Don’t let an administrative error or missed notice erase years of paid premiums and protection. If you need legal help for life insurance disputes in California we can help.
FAQ: Life Insurance Claim Denials Due to Policy Lapse
What is considered a lapse in a life insurance policy? A lapse occurs when premium payments stop and the grace period expires, resulting in canceled coverage. However, the lapse may be legally invalid if notice was improper or administrative errors occurred.
Can a life insurance policy be reinstated after a lapse? Sometimes. If the lapse was recent, some insurers allow reinstatement with proof of insurability. In wrongful lapse cases, legal action may compel payment without reinstatement.
Is the insurance company required to notify me before canceling a policy? Yes, in most states, insurers must send a lapse notice to the policyholder—and sometimes a secondary designee—before terminating a policy. Failure to do so can void the lapse.
What if my automatic payment failed due to a bank issue? If the policyholder took reasonable steps to maintain coverage and the insurer failed to alert them, the lapse may be considered wrongful and the claim can still be enforced.
Can I sue the insurance company for denying a claim due to lapse? Yes. If the lapse occurred due to the insurer’s failure to follow procedure, or if the notice requirements weren’t met, you may have grounds to sue for breach of contract or bad faith.