Our life insurance lapse lawyers work with beneficiaries of life insurance policies whose payout has been denied by the insurer claiming that the policy lapsed.
Policy lapse is one of the main reasons insurance companies use to deny a life insurance claim. While it is true that policy lapse may be a valid reason for denial, many life insurance policies are wrongfully lapsed by insurance companies. Life insurance laws for lapsed policies place certain obligations on insurance companies and provide protections to policyowners and their beneficiaries. If the insurer fails to follow the law when deciding that a policy was invalid at the time of death, beneficiaries may still be entitled to the payout despite the apparent lapse in coverage. To improve your chances of recovery, you need an experienced life insurance lapse attorney on your side.
At our life insurance law firm, we are always available for a free consultation. We will review your file and let you know whether we can recover your claim based on a lapsed policy. If your claim was unfairly denied due to failure to pay premiums, we will fight fiercely for you to recover what is rightfully yours. Call us at (888) 510-2212.
Our Experience in Handling Lapsed Life Insurance Claim Denials
Our life insurance attorneys are aware of the tactics insurers use to deny payment in cases involving lapsed life insurance policies, and have successfully recovered lapsed policy claims due to the following:
- The insurance company did not send a premium-due notice within the required time frame;
- The insurer did not send a lapse notice that complies with state laws;
- The insurer failed to send a premium-due notice to the correct address;
- The insurer did not send an annual notice asking policyowners to name a third party to receive premium-due notices and lapse letters;
- The insurer failed to keep a policy active during the grace period;
- The insurer provided a grace period that is shorter than required by the law;
- The insurer failed to provide information about life insurance conversion and portability rights when the policyowner left their job or retired.
We have recovered millions for beneficiaries facing the situations above. With years of experience, we have the knowledge that you need to hold insurance companies accountable when they fail to pay your claim. Here are a few case examples of successfully recovered claims:
- Unfairly denied claim because the insurer sent premium-due notices that did not comply with the state law;
- Denied life insurance claim due to insurer not sending a proper lapse notice;
- Unfairly denied claim because the policy has lapsed due to non-payment of premium;
- Life insurance claim denial reversed because the insurer did not disclose critical information about premium payment – Recovered $100,000 after the appeal;
- Denied claim due to a lapsed policy during the contestability period – Recovered $1 million for our client;
- Denied claim based on policy premium lapse without the insured sending any notice;
- Denied claim due to a policy lapse after the insurance company failed to send annual third-party notices advising policyowners of their right to designate someone else to receive their life insurance premium bill.
If you find yourself in one of the situations described above or you simply need legal advice, call a life insurance lapse attorney at our law firm for help.
How Our Life Insurance Lapse Attorneys Can Help Recover Your Payout
If you are a life insurance beneficiary and your claim was denied due to policy lapse, it is important not to take the denial at face value. Insurance companies’ failure to follow lapse laws might mean that the policyowner was not at fault for missing paying the premium, and you have a chance at recovering the death benefit. Our life insurance lawyers will investigate the circumstances of the denied claim and let you know of your legal options.
We are skilled at handling complex circumstances surrounding lapsed life insurance claim denials, and can assist you through all the steps of the claims process:
- Help you understand your life insurance beneficiary rights;
- Review your case and explain what your legal options are;
- Explain the contents of the denial letter;
- Make sure your rights are protected under policy terms and applicable law;
- Assist you in writing and filing a life insurance claim;
- File a comprehensive legal brief to appeal the life insurance claim denial;
- Anticipate and counteract insurance companies’ unfair tactics in denying claims;
Life Insurance Lapse Lawyer Fee
We work on a contingent fee basis – that means you pay attorney fees only if we win your case. We offer competitive contingent fee structures and will work with you to ensure you are comfortable with the fee.
If your life insurance claim has been denied due to a policy lapse, contact our life insurance lawyers for a free consultation. Call us at (888) 510-2212.
Below we will address some of the most frequent legal questions we get from beneficiaries who are in need of help with their denied life insurance claim due to policy lapse:
Life Insurance Policy Lapse FAQ
What Is a Life Insurance Lapse?
A life insurance policy lapses when one or more premium payments are not received on the due date and the account value of the insurance policy has already been exhausted. Insurance companies are legally bound to give a grace period, usually 31 or 60 days (it varies in different states) which begins on the date a premium is due and is not paid. Once this grace period expires and premiums remain unpaid the policy lapses.
What Happens When Life Insurance Lapses?
The consequences of a lapsed policy vary depending on the type of policy:
- Permanent life insurance lapse: This policy offers lifelong coverage and accumulates cash value over time. Missed premium payments are almost always automatically covered by loans from the cash value to keep the policy in force after the end of the grace period. These are called automatic premium loans and typically have to be elected when the policy is purchased. If there is not enough cash value in the policy to pay the premium, or once the cash value has been used up due to continued non-payment, the life insurance policy lapses.
- Term life insurance lapse: Term life insurance policies offer affordable coverage for a set period and have no present cash value. Once you miss a payment, the policy immediately moves into a grace period. If payment is not received by the end of this period, the life insurance policy lapses.
What Happens if the Life Insurance Policy Is Not in Force at the Time of Death?
When a life insurance policy lapses, the policy is no longer active (not “in force”) and the insurer is no longer legally obligated to pay the death benefits to the insured’s beneficiaries. Not all life insurance lapses are valid and a life insurance claim denied because the policy had lapsed may still be recovered.
Will Life Insurance Pay if the Insured Dies During the Grace Period With No Premiums Paid?
A life insurance grace period is a time period of usually 31 or 60 days (it varies in different states) which begins on the date a premium is due and is not paid. Generally, the policy stays active during the grace period. This means that if the insured dies during the grace period, the claim will be paid even if no premiums were paid during the grace period. If, however, the grace period ends and no payment is made, the insurer may treat the policy as lapsed and will deny any claims where deaths occur after the end of the grace period.
Many states required that insurance companies extend the grace period during the coronavirus pandemic. However if a payment was not made during the extended grace period, insurers will deny the benefits claim due to policy lapse.
What Can Cause Wrongfully Denied Claims?
Laws in many states provide wide protection to beneficiaries and policyowners by placing restrictions on insurance companies in regard to when a policy may lapse. Both life insurance companies and policyowners have certain responsibilities when it comes to keeping policies in effect.
A Policyowner’s Responsibilities
Policyowners are responsible for making sure their policy does not lapse by paying premiums on time. If premium payments are automatically drawn from a bank account, it is the policyowner’s responsibility to make sure the account always has sufficient funds to cover premiums. If a premium is not fixed and may increase, it is the responsibility of the policyowner to keep track of increased premiums payments to make sure a correct amount of premiums is submitted to the insurance company.
Finally, life insurance companies tend to communicate to policyowners via regular mail. Important policy documents such as premium-due notices, grace period letters, premium increase letters, and lapse notices usually arrive in the mail to the address last known to the insurance company. It is the policyowner’s duty to timely inform the insurer of an address change, bank account closure, etc. If the policyowner is not able to receive mail, he/she must designate another person to receive and read important life insurance notices.
A Life Insurance Company’s Obligations
Policyowners are not the only ones who have duties under a life insurance contract and laws. Insurance companies also have certain obligations. These obligations differ from state to state and may include the following:
- Send the policyowner a premium-due notice to the correct address: Keeping an updated record of the policyowner’s correct address may seem easy. Still, hundreds of life insurance claims get denied routinely, because an insurance company sends a premium-due notice to an insured’s old address or to the wrong address.
- Send a premium-due notice to the policyowner within a certain time period: If the policyowner does not receive a premium due notice during that specific time frame, he/she may not even find out that a premium is due before the lapse. This is especially true for situations where premiums are paid annually or where a premium is automatically withdrawn from the insured’s bank account.
- Provide the policyowner with a lapse notice that complies with state laws: These statutes vary from state to state, but they are all designed to protect policyholders and beneficiaries from wrongfully lapsed life insurance policies. They usually require an insurer to send specific, clear lapse notices that tell the policyowner exactly when the premium is due, when the grace period begins and when the policy will lapse if a missed premium is unpaid.
- Send annual notices to policyowners informing them of their right to designate a third party to receive mail about due premiums: Several states have enacted protections to shield consumers from losing life insurance coverage because of a missed premium payment. These laws require that insurance companies annually send policy owners letters asking them to designate another person to receive their premium due notices, grace period, and pending policy termination mail in case of an illness or incapacity. These requirements protect policyowners — including the elderly, hospitalized, or incapacitated and those who may be particularly vulnerable to missing a premium payment — from losing coverage. California is one of the states that enacted such laws. Our lawyers explain more about this in our article on the California life insurance lapse law.
Failure to Convert or Port the Employer-Provided Life Insurance Policy
An employer-provided group life insurance policy may also lapse due to non-payment of premiums. This usually happens when an employee is terminated or retires. In group life insurance cases governed by ERISA, employers have a duty to timely provide correct information regarding life insurance benefit changes to their employees. If there is an option to convert or port group coverage, employers may have a duty to notify the employee that their policy may terminate and they need to port or convert the group policy to an individual policy. Unless the insured fills out a conversion/portability application and submits it to the insurance company within a designated time frame, the policy will lapse.
If you or a loved one have issues with a denied ERISA claim, our lawyers can help. We have successfully handled many cases where life insurance companies denied coverage due to lapsed policies. Call us at (888) 510-2212 for a free case evaluation.
Can a Lapsed Life Insurance Policy Be Reinstated After Death?
Reinstatement is the process of making a life insurance policy active again after it has lapsed. Reinstatement is offered after the grace period has ended and the contract is no longer in force, leading to the termination of all the benefits and coverages provided for beneficiaries. A life insurance policy cannot be reinstated after the insured’s death.
What to Do if You Are the Beneficiary of a Lapsed Life Insurance Policy?
Life insurance claims denied due to lapse are very common and insurance companies often use nonpayment of premiums as a reason to deny a life insurance claim even when it should be paid. As a beneficiary, you have the right to know whether the insurance company sent premium-due notices to the correct address, whether the notice clearly warned the insured of the impending lapse and grace period and whether it gave the policyowner the exact date of when the policy will lapse if a missed premium is unpaid.
If the insurer fails to meet any of these obligations, you may have a chance of recovering your life insurance death benefits. However, many policyowners and beneficiaries are not aware of these laws and may take the insurance company’s denial as the final verdict. When a life insurance claim is not paid because the insurance company claims the policy has lapsed, you need to speak to a life insurance lawyer to understand your rights as a beneficiary.
The insurer may have made a mistake in denying your claim or there may be new life insurance laws in place which provide more protections to you as the beneficiary. If your life insurance claim has been denied, contact our life insurance lawyers now for a free consultation. Call us at (888) 510-2212.