If a policyholder stops paying premiums on a life insurance policy, coverage may lapse or be canceled. When that happens, beneficiaries are often shocked to learn that the death benefit they were relying on may no longer exist. The legal rules surrounding nonpayment are strict, and once a lapse occurs, insurers are often on solid legal footing to deny a claim.
This article explains how grace periods work, what happens when a policy lapses, and the narrow circumstances in which a denial based on nonpayment can still be challenged.
Why Life Insurance Premiums Are Commonly Missed
Life insurance premiums are easy to deprioritize during financial hardship. Job loss, medical bills, divorce, or the cost of raising children can force families to choose which obligations get paid first.
Life insurance often falls to the bottom of that list because it feels abstract. The benefit only matters if someone dies. Unfortunately, when death occurs during or after a lapse, the consequences for surviving family members can be severe and irreversible.
The Grace Period Explained
Most life insurance policies include a grace period, usually around 30 days after the premium due date. During this window, coverage remains active even though payment has not been made.
For example, if a premium is due on January 15 and the insured dies on February 2, the policy is typically still in force. A beneficiary claim in that situation is often paid, assuming no other exclusions apply.
The grace period exists to protect policyholders from accidental or temporary nonpayment. It does not provide long-term protection.
What Happens After the Grace Period Expires
Once the grace period ends without payment, the insurer has the right to cancel the policy. At that point, coverage is no longer in effect.
If death occurs after cancellation, even by a few days, insurers will almost always deny the claim. Courts generally uphold those denials unless a specific legal defect exists.
In most cases:
• The policy is terminated once the grace period ends
• Coverage is not retroactive unless reinstated
• Death after lapse results in denial
This is true even when the insured intended to make payment or was unaware the policy had lapsed.
Reinstatement Is Not Automatic
Many policies allow reinstatement after lapse, but reinstatement is not guaranteed and often comes with significant hurdles.
Reinstatement typically requires:
• Payment of all missed premiums
• Submission of a reinstatement application
• Updated health disclosures
• Sometimes a medical exam
Health changes matter. A policy issued years earlier at a favorable rate may no longer be affordable or even available once reinstatement is requested.
In some cases, reinstatement is denied entirely based on new medical information.
Why Lapse Denials Are Hard to Fight
Claims denied due to nonpayment are among the most difficult life insurance denials to overturn. Unlike misrepresentation or cause-of-death disputes, lapse cases often involve clear contractual terms and documented payment histories.
That said, limited exceptions do exist.
A denial may be contestable if:
• Required lapse or cancellation notices were not properly sent
• State law provides extended grace protections for certain policyholders
• The policy contained a nonforfeiture provision converting it to reduced or paid-up coverage
• A reinstatement application was submitted before death
• Premiums were misapplied or incorrectly credited
These situations are fact-specific and rare, but they are worth reviewing.
The Hard Truth About Lapsed Policies
We regularly speak with families who assumed a policy was still active, only to learn after a death that coverage ended due to missed payments. In many of those cases, there is little or no legal remedy.
Once a valid lapse occurs and death follows, courts generally enforce the policy as written.
That is why prevention matters.
How Policyholders Can Reduce Lapse Risk
Families can reduce the risk of lapse by:
• Setting up automatic payments
• Listing a secondary contact to receive lapse notices
• Communicating with the insurer during financial hardship
• Reviewing grace and reinstatement terms before skipping payments
• Periodically confirming policy status
These steps matter more than most people realize.
We Review Lapse-Based Denials Carefully
While lapse denials are difficult, they are not always final. If you received a denial based on nonpayment, it is still worth having the policy and payment history reviewed.
We evaluate these cases honestly. If a challenge is possible, we will explain your options. If not, we will tell you that as well. There is no cost to review the denial.