Life Insurance Lapse and Nonpayment Issues
Christian Lassen, Esq. | Quoted in The Wall Street Journal | 25 Years Experience
If your life insurance claim was denied because the insurer claims the policy lapsed for nonpayment, you may still have strong legal options. Life insurance lapse denials are among the most commonly disputed claims because insurers frequently fail to follow the strict legal requirements required to terminate coverage.
At Lassen Law Firm, we focus exclusively on helping beneficiaries challenge denied life insurance claims nationwide, including wrongful lapse and nonpayment denials. Christian Lassen, Esq., has 25 years of experience handling life insurance disputes and personally manages every lapse case to ensure insurers are held accountable.
When a Life Insurance Policy Can Be Declared Lapsed
A life insurance policy does not automatically lapse the moment a premium is missed. Insurers must comply with specific legal requirements before terminating coverage. These requirements often include advance notice of missed payments, a mandatory grace period, and clear warnings about lapse consequences.
Many policies also allow reinstatement after lapse, particularly when nonpayment was caused by illness, incapacity, administrative error, or payment mishandling. If an insurer fails to follow these procedures exactly, the policy may still be enforceable.
Why Life Insurance Policies Are Wrongfully Lapsed
Insurance companies frequently declare policies lapsed based on incomplete or inaccurate payment records. Premiums may be mishandled, misapplied, or delayed by employers, banks, or the insurer itself. Notices may be sent to incorrect addresses or not sent at all.
In group life insurance policies, employers may fail to deduct or forward premiums properly, yet insurers still deny claims. In other cases, automatic bank drafts fail due to technical errors, and insurers immediately declare lapse without proper notice.
These situations often result in wrongful denials that can be challenged.
How We Challenge Lapse and Nonpayment Denials
At Lassen Law Firm, we conduct a detailed review of the policy terms, premium history, correspondence, and statutory notice requirements. We demand proof of all lapse notices, grace period compliance, and payment handling.
When insurers cannot prove they followed the law, we pursue reversal of the denial through appeal or litigation. We regularly file lawsuits for breach of contract and insurance bad faith when lapse denials are unsupported.
In one recent case, we recovered $500,000 for a family after an insurer denied a claim based on alleged nonpayment. The insurer failed to send required lapse notices, and coverage remained in effect at the time of death.
Common Reasons Insurers Claim Policies Lapsed
• Missed premium payments without proper notice
• Failure to send grace period or lapse warnings
• Employer failure to forward premiums
• Bank automatic draft errors
• Misapplied or miscredited payments
• Notices sent to incorrect addresses
• Lapses during medical or mental incapacity
• Confusion over automatic premium loans
• Death during grace period
• Mishandled reinstatement applications
What To Do If Your Claim Was Denied for Lapse
If your life insurance claim was denied due to alleged lapse:
- Request the complete policy history and payment records
- Demand copies of all lapse and grace period notices
- Review correspondence and address records carefully
- Avoid accepting the denial without legal review
- Contact an attorney experienced in lapse disputes promptly
- Time limits apply, and early legal review significantly improves outcomes.
For a concise overview of lapse issues and immediate steps, see our Life Insurance Lapse and Nonpayment Fact Sheet.
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Written & Reviewed by Christian Lassen, Esq., Nationally recognized life insurance lawyer: 25 years experience, hundreds of millions recovered. Quoted in The Wall Street Journal ( May 17, 2025).
Last reviewed: Dec 20, 2025 | Contact 800-330-2274
Frequently Asked Questions About Life Insurance Lapse Issues
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A grace period is the time after a missed payment during which the policy remains in force, usually 30 to 60 days depending on state law and policy terms.
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No. In most states, insurers must send a written notice of overdue premiums and warn of pending lapse before terminating coverage.
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The policy may still be enforceable. Beneficiaries can challenge the lapse based on the insurer’s failure to provide required notice.
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Yes. If the insured dies during the grace period, the policy is still considered active, and benefits should be paid.
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Yes. In group life insurance policies, employers sometimes fail to forward premiums properly, leading to wrongful lapse denials.
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Yes. If automatic payment setups fail through no fault of the insured, lapses may be challenged.
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Some policies automatically borrow against cash value to cover missed payments. Failure to apply this correctly can lead to wrongful lapse claims.
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Possibly. Some courts excuse nonpayment if the insured was mentally incapacitated and missed premiums without proper notice.
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No. Reinstatement must occur while the insured is alive, but wrongful lapse denials can still be challenged posthumously.
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Not without following strict notice and grace period rules. Beneficiaries can often challenge technical denials.
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Deadlines vary by state, but it’s critical to act within 1 to 5 years depending on the policy and jurisdiction.
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Not necessarily. Payments mailed within grace periods or accepted by insurers may keep coverage active.
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Bank records, payment receipts, insurer correspondence, and premium notices are key evidence.
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If the insurer used an outdated address despite updated information, lapse denials can often be overturned.
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Possibly. If the insured submitted a reinstatement application before death, it may help challenge a lapse denial.
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In some states, special grace periods and protections applied during COVID-19 emergencies. They can help fight wrongful lapses.
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Only if the insurer followed all legal notice and grace period requirements. Otherwise, beneficiaries may still recover.
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Misapplied premiums can lead to wrongful lapses — and courts often hold insurers accountable for these errors.
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An attorney can obtain records, challenge improper lapses, negotiate settlements, and litigate if necessary to enforce payment.
Our Clients Speak Volumes
The Right Choice for Your Claim
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“I was told the life insurance policy had lapsed due to unpaid premiums. But Christian Lassen's team proved the company had failed to send proper notice. They fought back and got the policy reinstated retroactively. I’m incredibly grateful.”- James L.
Why The Lassen Law Firm Is Different
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Proven National Results
With over two decades of exclusive focus on life insurance litigation, we’ve helped thousands of families recover wrongfully denied benefits. Our reputation for fast, strategic resolutions has made us a trusted national resource for complex claim disputes.
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Recognized ExpertisePerfect 10.0 Avvo rating endorsed by over 1,700 attorneys; life member of the Multi-Million Dollar Advocates Forum; ranked among the top 1 percent of lawyers nationally for life insurance litigation.
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Client-First AdvocacyNo upfront fees: our contingency fee guarantee aligns our interests with yours; we provide personalized, compassionate representation from your initial consultation through resolution.
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Media & Community LeadershipQuoted in The Wall Street Journal and featured in leading legal publications; frequent speaker at national conferences; dedicated to charitable efforts supporting pediatric cancer care.
