Life Insurance Lapse & Nonpayment Issues Fact Sheet
Christian Lassen, Esq. | Quoted in The Wall Street Journal | 25 Years Experience Helping beneficiaries nationwide challenge wrongful lapse and nonpayment denials.
What Is a Lapsed Life Insurance Policy?
A lapsed policy is one the insurer claims is no longer in effect because premium payments stopped. Once a policy lapses, coverage ends, and claims may be denied.
However, insurers must follow strict 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 many reasons, including:
- Missed premium payments without proper notice
- Insurer’s failure to send grace period or lapse warnings
- Employer’s failure to deduct or forward premiums (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
- Confusion about automatic premium loans
- Death during grace period not honored by insurer
- Reinstatement applications mishandled or ignored
Many denials are based on administrative mistakes or improper notice, not actual nonpayment.
What To Do If Your Claim Was Denied for Lapse
- Request the full policy history and payment records from the insurer.
- Demand copies of all notices allegedly sent about missed payments.
- Do not accept the denial at face value review carefully.
- Contact an experienced life insurance attorney to challenge the lapse.
- Act quickly strict deadlines apply to contest wrongful denials.
Your Legal Rights
- Insurers must prove proper notice was given before declaring a lapse.
- Beneficiaries can challenge wrongful denials in court.
- Lawsuits for breach of contract or bad faith may recover benefits plus damages.
Case Example
We recovered $500,000 for a family after the insurer wrongfully claimed a policy had lapsed due to a missed premium. Proper notices were never sent, and we proved the coverage was still valid.
Frequently Asked Questions
Q: What happens if premiums were missed but no notice was sent?
A: The policy may still be enforceable. Insurers must follow notice requirements.
Q: Can a death during the grace period be covered?
A: Yes insurers must honor coverage during the grace period.
Q: What if my bank failed to draft the payment?
A: Beneficiaries can challenge denials caused by bank or employer errors.
Q: Do I need an attorney?
A: Yes lapse disputes involve technical notice rules that require legal expertise.
How We Help
- Analyze policy documents, payment records, and correspondence.
- Prove insurers failed to provide required notices or misapplied payments.
- File lawsuits for breach of contract and bad faith when necessary.
- Secure rightful payouts for families nationwide.
Contact Us
If your life insurance claim was denied due to alleged lapse or nonpayment, don’t wait. Deadlines are strict, and insurers count on families giving up. Call 800‑330‑2274 for a free consultation. No fees unless we win.
Key Takeaways
- Insurers must prove proper notice before declaring a lapse.
- Many lapse denials result from administrative errors or misapplied payments.
- Beneficiaries have strong legal rights to challenge wrongful denials.
- Prompt legal action increases the chance of recovering benefits.
Free Case Evaluation Contact Us!
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 7, 2025 | Contact 800-330-2274
Our FAQ
Have questions? We are here to help. Still have questions or can't find the answer you need? Give us a call at 800-330-2274 today!
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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 mom died after a non-traditional medical procedure, and the insurer refused to pay. Lassen Law proved the treatment had nothing to do with the cause of death. They fought like it was their own family involved.”- Emily N.
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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