Life Insurance Lapse and Nonpayment Issues
If your life insurance claim was denied because of an alleged policy lapse, you still may have legal options. Insurance companies frequently claim that coverage lapsed due to nonpayment of premiums — sometimes correctly, but often wrongfully. At Lassen Law Firm, we focus exclusively on helping beneficiaries overturn denied and lapsed life insurance claims nationwide. Christian Lassen, Esq., a life insurance attorney with 25 years of experience, personally handles every case to ensure experienced, aggressive representation.
If a life insurance policy is claimed to have lapsed, the insurer must prove that proper notice was given and that all legal requirements for cancellation were followed. Beneficiaries have the right to challenge improper lapse denials.
What Is a Lapsed Life Insurance Policy?
A lapsed life insurance policy is one that the insurer claims is no longer in effect because premium payments stopped. Once a policy lapses, coverage ends, and the insurer may deny any claims arising after the lapse date. However, insurers must follow specific legal procedures before terminating coverage, including notice requirements, grace periods, and reinstatement options.
If they fail to do so, the policy may still be enforceable despite a claimed lapse.
Why Life Insurance Policies Lapse
Policies can lapse for various reasons, including missed premium payments, employer errors in forwarding payments, bank draft mistakes, or failures to send required premium notices. Sometimes, insurers wrongfully treat policies as lapsed when proper notice was not given, or when payments were mishandled by the insurer, employer, or bank.
Disputes often arise when beneficiaries believe coverage was still active at the time of death.
How We Help With Life Insurance Lapse Disputes
At Lassen Law Firm, we analyze policy documents, premium payment records, correspondence, and legal requirements for each alleged lapse. We challenge wrongful lapse denials by proving the insurer failed to provide required notice, improperly applied payments, or otherwise violated the law. When necessary, we file lawsuits for breach of contract and insurance bad faith.
For example, we recently recovered $500,000 for a family after the insurer wrongfully claimed a policy had lapsed due to a missed premium — even though proper notices were never sent.
Common Reasons for Alleged Life Insurance Lapses
- Missed premium payments without proper notice
- Insurer's failure to send grace period or lapse warning notices
- Employer's failure to deduct or forward premiums (for group life policies)
- Bank auto-draft failures
- Misapplied payments by the insurer
- Premium notices sent to the wrong address
- Lapses during medical or mental incapacity periods
- Policyholder confusion about automatic premium loans
- Death during grace period not honored by insurer
- Reinstatement applications mishandled or ignored
What to Do If Your Life Insurance Claim Was Denied for Lapse
If a life insurance claim was denied due to alleged lapse:
- Request the full policy history and payment records from the insurer.
- Demand a copy of all notices allegedly sent about missed payments.
- Avoid accepting the denial at face value without review.
- Contact a life insurance attorney experienced in lapse and notice disputes.
- Act quickly — legal deadlines to contest wrongful denials are strict.
Prompt action gives you the best chance to recover benefits owed under the policy.
Contact us today for a free consultation.
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: June 8, 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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“My husband didn’t list a prior policy cancellation, and they used that to deny our claim. Lassen Law proved it was irrelevant and unrelated to the cause of death. We received the benefit without a prolonged legal battle.”- Daniel S.
Why The Lassen Law Firm Is Different
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Proven National ResultsRepresenting clients coast to coast and recovering hundreds of millions in denied life insurance claims, we secure justice and peace of mind for families everywhere.
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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.