Life Insurance Claim Lapse Denial
Life insurance is often seen as a safety net, a guarantee of financial protection in times of need. However, there are circumstances where policyholders find themselves in bad situations, unable to claim benefits due to a lapse in the policy, not because they didn’t meet their obligations, but because of administrative errors or miscommunication.
What is a life insurance policy lapse?
A policy lapse occurs when an insurance policy is no longer active due to non-payment of premiums or failure to meet other contractual requirements. When a policy lapses, the coverage ceases, and claims made during this period are typically denied. While policy lapses are often attributed to the policyholder’s oversight, there are cases where the lapse results from administrative errors or breakdowns in communication between the insurer and the insured.
Administrative errors leading to policy lapses can happen in several ways. Simple data entry errors, like recording an incorrect payment date or amount, can cause a policy to be marked as unpaid. Miscommunication can also play a role, such as when insurers send important notices to outdated addresses or fail to adequately inform policyholders of impending lapses. Payment processing issues can also be a factor, where delays or errors in processing automatic payments or checks result in missed premium payments and unintentional lapses. Additionally, automated systems used by insurers can occasionally malfunction, leading to incorrect records of payment or notification delivery. Insurers have a role to play in preventing policy lapses. They should improve communication channels to ensure notices are sent promptly and through multiple channels, such as email, mail, and text. Regularly auditing systems to identify and fix glitches, training staff to address policyholder concerns accurately, and implementing redundancy checks for critical data entry tasks can all help reduce administrative errors. If a life insurance claim is denied due to lapse due to an administrative error, policyholders have recourse. While insurers have a responsibility to maintain accurate records and communicate effectively, policyholders must also play an active role in managing their coverage.
The life insurance lawyers at LifeInsuranceAttorney.com will fight life insurance claim denials due to policy lapses whether it is MetLife, Prudential, or any other insurance company…and win.