A life insurance claim is often denied because the insurer asserts that coverage lapsed before the insured’s death. In these cases, the insurance company does not dispute the beneficiary designation, the cause of death, or the policy amount. Instead, it claims the policy was no longer in force due to nonpayment of premiums.
Coverage lapse denials are among the most frequently challenged and most commonly overturned types of life insurance claim denials.
What a Coverage Lapse Really Means
A life insurance policy does not lapse the moment a premium is missed. Lapse occurs only after the insurer strictly follows the policy’s grace period and notice requirements.
Most policies include a grace period that keeps coverage active for a defined time after a missed payment. If the insured dies during that grace period, coverage typically remains in force and the insurer may still owe the death benefit, often reduced by the unpaid premium.
A valid lapse requires more than a missed payment. It requires procedural compliance by the insurer.
Why Coverage Lapse Denials Are Often Wrong
Many lapse denials are based on administrative errors rather than true termination of coverage. Common issues include:
Premium payments applied late or credited incorrectly
Automatic drafts that failed due to bank or processing errors
Notices sent to the wrong address
Failure to send required lapse or termination warnings
Incorrect calculation of grace periods
Payments accepted after the alleged lapse date
In these situations, insurers may claim the policy ended even though contractual or statutory requirements were not met.
Grace Periods Often Control the Outcome
Grace period provisions are central to lapse disputes. Most policies remain active for at least 30 days after a missed payment. Some provide longer protection.
If death occurs within the grace period, courts often find that coverage was still in force. Insurers are frequently required to pay the claim and deduct the overdue premium from the benefit.
Many beneficiaries are never told this and assume a missed payment automatically voids the policy. That assumption is often incorrect.
Notice Requirements Are Frequently Violated
Many life insurance policies and state laws require insurers to provide specific written notices before coverage can terminate. These notices must often meet strict timing and content requirements.
If proper notice was not sent, or was sent incorrectly, the lapse may be invalid. Courts regularly rule that coverage continued when notice requirements were not followed.
This issue is especially common with elderly insureds, address changes, and electronic billing transitions.
Automatic Payments and Third Party Errors
Coverage lapse disputes often involve automatic payment arrangements. When a bank rejects a draft or a payment processor fails, insurers sometimes deny claims without examining why the payment failed.
Whether coverage lapsed depends on policy language and payment history, not merely whether a single draft was returned. Insurers are not always permitted to terminate coverage immediately based on a processing failure.
Reinstatement Issues After Missed Payments
Some policies allow reinstatement after lapse if certain conditions are met. Problems arise when insurers accept reinstatement payments or premiums after the alleged lapse but still deny the claim.
Acceptance of premiums after a claimed lapse can undermine the insurer’s position that coverage ended. These facts often play a decisive role in successful challenges.
What Beneficiaries Should Do After a Coverage Lapse Denial
If a life insurance claim is denied due to an alleged lapse:
Request the full policy and all billing records
Obtain a complete premium payment history
Review grace period and notice provisions
Confirm where lapse notices were sent
Preserve bank statements and payment confirmations
Coverage lapse cases are fact driven and depend heavily on documentation.
Why These Denials Are Frequently Reversed
Insurers bear the burden of proving that coverage terminated in strict compliance with the policy and applicable law. Any deviation in notice, timing, or payment handling can invalidate the lapse.
Many lapse based denials fail because insurers cannot prove that coverage actually ended before death.