Lapse Life Insurance

Insurance companies frequently pretend that they didn't receive a premium, and thus have cancelled the policy. Laws controlling lapse due to non-payment are complex and are always evolving. Insurance companies have an ongoing duty to update their contracts and practices according to new laws. However, not all of them are as diligent as we want to believe they are. Many insurers fail to adjust their policies to the new regulations, fail to inform insureds of an upcoming lapse, or fail to send proper premium-due notices to a correct address. All these and many other mistakes may be revealed on appeal and make an insurer liable on a claim. It means that if you hire an experienced lapse attorney, your chances of recovering life insurance money are much higher than if you were trying to get it on your own.

We all get too busy and overlook some things, allowing bills to get overdue. Unlike a regular bill, however, non-payment of a life insurance premium can have serious consequences. Not only may a lapse in a life insurance policy cancel the policy, but it also can go unnoticed by the policyholder and the beneficiary for a long time if the insurer fails to send a cancellation notice timely. If you are a beneficiary on a life insurance policy that lapsed due to non-payment, you can still get your benefits if you can prove that the insurance company faulted in not sending the notice of cancellation in a proper manner. It is best to consult a life insurance attorney if your claim was denied due to policy cancellation.

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Laws Governing Lapses in Life Insurance Policies

There is much case law governing the notice procedures to be followed by insurance companies when a policy lapses or terminates for non-payment of premiums. In some jurisdictions, the law says that the insurance company bore the burden of establishing the cancellation before the insured's death. The insurer can create a presumption that the insured received a notice of cancellation by describing the standard operating procedure used by the company to ensure that such notices are properly mailed or it can provide proof of actual mailing.

Under such statutes, the policyholder will be considered to have received the notice of cancellation if the insurance carrier mailed the notice to the insured's last known address, even if the insured never received the notice. Depending on the law of the state the beneficiary lived in, a beneficiary may be successful in challenging the manner in which a cancellation notice was mailed, therefore, invalidating the policy rescission and reinstating benefits.

What To Do If Your Life Insurance Policy Lapsed

Paying your premiums on time ensures that your policy remains active, but missing a payment prompts the life insurance company to grant you a 31-day grace period. During this time, you have the opportunity to submit the missed premium and reinstate your policy. However, if you fail to provide the overdue premiums before the grace period ends, your policy will lapse.

In the event of a policy lapse, you can initiate the reinstatement process by requesting an application, answering health-related questions, and paying the outstanding premium. The specific procedures for reinstatement vary among companies. In many cases, policyholders are required to settle all past-due premiums and typically have a limited window of approximately five years to request reinstatement.

Our law firm has overcome every single lapse case that we have undertaken. We have been paid 100% of the time on all cases retained. Many insurance companies try to concoct a lapse so they won't have to pay, while other times, the refusal to pay is unlawful. The life insurance company is required to send a lapse notice to the insured. Insurance companies try to deny coverage on policies when it should have been in effect.

For many people, life insurance policies are a sound financial planning tool. They pay relatively affordable premiums during their lifetime and, in exchange, the life insurance company pays their designated beneficiary a lump sum payment upon their death. For many families, life insurance payouts can mean the difference between survival and poverty.

In many cases, policyholders keep the same policy in place for years on end. So long as they continue to pay their premiums, they continue to be insured and they continue to enjoy the security that comes with that insurance. Indeed, under some policies, so long as a policyholder pays premiums on time, she will not be subject to repeated questions about her health from the insurer.

As a person ages, this becomes particularly important. For example, a policyholder who was in perfect health when she first obtained her policy at age 30 may begin experiencing some chronic health problems as she approaches her 50s. To the extent she can avoid having those problems disclosed to her life insurance company, it may help keep her premiums lower than they would be if she first obtained a policy at age 50.

But what happens if that policyholder starts missing premium payments? Can her policy be cancelled? What happens if she dies while a premium payment is past due? Does that mean her beneficiaries won’t receive the policy payout she intended for them?

Late payments

Let’s face it, from time to time most of us run into cash flow dilemmas. It doesn’t matter if we live from paycheck to paycheck or generally have savings to turn to during the hard times. Every single one of us is vulnerable to periods of time when we just can’t pay all of our bills.

When that happens, we have to prioritize which bills we pay and which bills we choose to ignore for the time being. For many people, things like mortgage payments, rent, car payments, or child support are the bills we try to pay first. Other bills, such as credit card payments or life insurance premiums may take a back seat.

From the standpoint of keeping your life insurance as the secure financial planning tool you intended, it is best if you keep premium payments at the top of your priority list. That way, if you die at any time during the policy term (and your death does not come within a policy exclusion), your claim will likely be paid out to your beneficiaries. But what happens if you just can’t make that premium payment on time?

Generally speaking, insurance companies give policyholders a 30-day grace period within which the policy remains intact. This means that if your premium is due on February 1 but you die on February 27 without having paid the bill, your life insurance company is still obligated to pay your beneficiaries without objection.

Remember, however, that just because a life insurance company is supposed to do something, does not mean they will actually do it. We get calls from time to time from beneficiaries who have had life insurance claims denied because the policyholder was late on his premium payments – even if that policyholder was still in their grace period.

In our line of work, we see life insurance companies try to deny valid claims all the time. They are hoping beneficiaries won’t have the wherewithal to contest such denials. If this happens to you, let us do your bidding. We aren’t afraid to push back on claim denials that result from late payments.

The reinstatement period

After the grace period ends, life insurers are generally free to suspend or cancel your policy. Though circumstances can differ from state to state and from policy to policy, most insurers still grant policyholders a 30 to 60-day reinstatement period. That means that even though your policy has been terminated due to non-payment, the insurer may restore the policy if your bring your premium payments current during that period.

Note, however, that during the reinstatement period, you may have to fill out new health questionnaires or subject yourself to new physical examinations before your policy will be reestablished. This is where the scenario we described in the introduction becomes critical. If your health has deteriorated since you first obtained the policy, you may no longer be eligible for life insurance. And, even if you are, you may be subject to much higher premiums than before.

Moreover, if you pass away during this period, the life insurance company will almost certainly deny any claim made by your beneficiaries. In these circumstances, claim denials can be much harder to overcome. That doesn’t mean the insurance companies are always right.

If you are a life insurance beneficiary who is facing the denial of a claim based on alleged late payment or nonpayment, you should talk to an attorney who specializes in the denial of life insurance claims. If you call our firm, for example, we’ll perform an initial consultation where we discuss the policy at issue, your claim submission, any evidence or information you have about payment or nonpayment of policy premiums, and any other information that is particular to your case.

We will provide you with a thorough and honest assessment of your ability to contest the claim denial. If we believe you have a strong case, we will represent you with no out-of-pocket costs to you unless and until we recover on your claim. We’re confident in making these arrangements because we successfully contest life insurance claim denials every day. We’re here to help.

Why Hire Us?

Experience: All our lawyers have a minimum of 15 years experience handling life insurance claims. There are a handful of young lawyers with fancy sites who are doing more harm than good, and their clients who get denied again end up coming to us to get paid.

Professionalism: When you hire us to appeal your claim denial, you can be guaranteed that we will conduct the most thorough investigation possible and develop a strategic plan aimed at recovering the proceeds for you. We will keep you informed every step of the way and will present you with various options.

Availability: You will be able to speak with an experienced attorney every time you call our firm. We make sure an attorney is always available to discuss your case with you at any time of the day. We pride ourselves in being available to listen to our clients' concerns and help them in the fight with large insurance companies.

Low Contingent Fees: We work on a contingent fee basis. It means that you will not be charged unless we recover a life insurance payout for you. Only if we win your case, will we get paid. You will not owe any hidden costs or fees not discussed in our agreement with you. If your claim has been denied due to non-payment of premiums, call our top insurance attorneys. We know the laws and the insurance industry to help you get your claim paid!

Recent Lapsed Claims Settled

  • Stonebridge dies before the testator $101,290.00
  • Pruco Life passage of time $53,855.00
  • GPM Life lapse into bad $44,100.00
  • Country Life delay of payment lapse $122,000.00

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Before Pete’s death he worked as an employee for Cracker Barrel for two years. Shortly after he began working, he enrolled in Cracker Barrel’s “Group Basic Life and Health” benefit plan. This plan was split into three options. A health insurance plan, a life insurance plan, or both. Pete elected to receive both health and life insurance. Pete named his daughter Alicia as the sole beneficiary of his life insurance plan.

After his first year of work, Pete decided to cancel his health coverage but maintain his life insurance. Less than a year later Pete died.

Alicia subsequently filed a claim for his life insurance with Cracker Barrel and Prudential.

To her shock Cracker Barrel and Prudential denied her claim.


In defending their position, Cracker Barrel presented a copy of Pete’s policy. In the policy it stated, “no plan participant may have life insurance coverage without having health insurance coverage. . . .Employees not enrolled for health insurance coverage are not members of the covered class of employees who may be enrolled for life insurance coverage.”

This short paragraph was buried in Pete’s in-between several pages.

According to the record, it was very clear that Pete had no idea he was cancelling his life insurance.

In ruling for the insurance company the court stated, “where the plan documentation makes participant and beneficiary rights and obligations clear. . . .[The insurance company is] not obliged to individually notify plan participants or beneficiaries of the specific impact of a plan's terms on them based on their personal circumstances.”

The insurance company won with fine print. So long as it was there and the language was clear, they didn’t have to tell Pete what he didn’t know he was doing.

This is one of many games played by insurance companies.

Insurance companies can deny claims for failing to disclose medical conditions, even though the death was unrelated, failing to timely pay premiums, failing to list the correct age, failing to properly convert policies, criminal history being discovered post death, and multiple beneficiaries to list a few. If you fear that your claim is going to be denied, please contact an attorney.


David, a former Navy SEAL, took his own life in March 2014. David was a hero. He served seventeen years in Navy, during which he was deployed to Iraq, Afghanistan, and Kuwait.

Over the course of his many tours, David experienced almost every form of combat. In addition to this intense lifestyle, David was also constantly sleep deprived and “on guard.”

Following his retirement from the Navy, David began working for Blackbird Technologies. Blackbird Technologies provided its employees life insurance through Unum Insurance. David enrolled in two of their life insurances policies.

Between the time of his employment and his death, David became less social and more irritable. David also couldn’t sleep, averaging two hours per night for last years of his life.

David sought help and was diagnosed with Post-traumatic Stress Disorder, Major Depressive Disorder, and Generalized Anxiety Disorder.

Two days after visiting the hospital, David shot himself in his car.

At the time of his death, Jennifer, his wife, was the named beneficiary of the policy. She filed her claim with Unum.

Unum denied her claim pursuant to his policies suicide exclusion.

Jennifer asserted that his mental illness caused his death and he didn’t willfully kill himself.

The court unfortunately didn’t buy it. In ruling for MetLife the court stated that since the plan did not contain a “sane or insane” clause, David’s death was a suicide within the meaning of the policy.

If you have any doubt whether you’re covered, please contact our attorneys. Our experienced attorneys are here to help you with understanding your policy or claim.