Life insurance companies are allowed to deny a claim if the policyholder failed to make required premium payments—but only if they followed the legal procedures for doing so. These procedures include giving timely notice of nonpayment and offering a grace period before cancellation. When a policy lapses under questionable circumstances, beneficiaries may still have a valid claim. That’s why it’s critical to get legal help before accepting a denial at face value.
Why So Many Denials Involve Nonpayment Issues
Although there are a handful of legitimate reasons for a life insurance claim to be denied—such as material misrepresentation, death during the contestability period, or a policy exclusion—the most common one we see is a claim of policy lapse due to nonpayment. In theory, this sounds simple. In reality, it often involves errors, bad communication, or third-party interference that the insurer ignores.
When the policyholder passes away and the insurer claims the policy was cancelled, beneficiaries often have little information about the premium payment history. This leaves them in the dark, tempted to walk away from what they believe to be a lost cause. But a denial based on nonpayment is not always the end of the road. If you need life insurance claim help in Tennessee call today.
Case Spotlight: Denied Claim Despite Responsible Planning
This case involved a man named Sean, an adventurous and successful professional in his late 30s. After achieving early financial independence, Sean took a two-year sabbatical to travel the world. He was meticulous in planning his leave—especially when it came to making sure his financial obligations would be handled in his absence.
Sean had a $2.5 million life insurance policy and named his sister Judy as the sole beneficiary. To ensure his premiums and other bills were paid during his travels, he:
Opened a separate checking account with enough funds to cover a year’s worth of bills
Hired someone to manage payments from that account
Left detailed instructions—including monthly reminders to pay his life insurance premium
Provided a forwarding address and full access to necessary accounts
Unfortunately, Sean’s plans were sabotaged when the woman he hired emptied his bank account and failed to pay any of his bills—including the life insurance premiums. She also ignored his mail, including warnings from the insurer that his policy was in danger of cancellation.
A Tragic Turn of Events
During a months-long excursion in Southeast Asia, Sean was completely unreachable by phone, email, or text. Just days after returning to civilization, he was fatally struck by a car.
When Judy submitted a claim for the death benefit, she received a cold, one-line denial: “Claim denied. Policy cancelled due to non-payment.” She was stunned. Her brother had been diligent about his financial planning and had even given her all the details she would need to file a claim.
Uncovering the Truth—and Overturning the Denial
Unsure of what to do, Judy hired an attorney who specialized in denied life insurance claims. With the help of law enforcement, the attorney uncovered clear evidence that Sean had planned to keep his policy active and had been defrauded by the woman he trusted.
Key findings included:
A full year of prepaid funds in a separate account
Detailed written instructions highlighting the importance of the life insurance premium
Evidence that Sean had no access to communications during the policy lapse period
Confirmation that no notices were forwarded due to the woman’s negligence
Armed with this information, the attorney submitted a formal appeal to the insurance company. He demanded that the claim be paid in full, arguing that Sean had made every reasonable effort to keep the policy in force and that the lapse was due to criminal fraud—not negligence.
After negotiations, the insurer agreed to pay the entire death benefit, less the small amount of unpaid premiums that should have been deducted had the payments been made on time. Judy received nearly the full $2.5 million—an incredible outcome considering the initial flat-out denial.
When Life Insurance Companies Deny Claims for the Wrong Reasons
Insurers know that denying a claim over missed payments is one of the easiest ways to avoid paying a large death benefit. But just because a policy shows as "lapsed" in their system doesn’t mean the lapse was legal—or fair.
You may still have a case if:
The policyholder made payments regularly but missed one due to illness or incapacity
The insurer failed to send proper notice of nonpayment to the correct address
A third party was responsible for managing payments and committed fraud or failed to act
The lapse occurred shortly before death after years of consistent payment
The insurance company ignored signs of the policyholder’s intent to keep coverage active
Legal Help Makes the Difference
Without legal help, Judy may have believed the denial was final. But attorneys who handle life insurance claim denials every day understand how to:
Investigate the facts surrounding the policy lapse
Demand that the insurer produce proof of proper notice
Uncover fraud, mistakes, or administrative failures
File appeals or lawsuits to enforce payment
Let Us Fight for the Life Insurance Payout You Deserve
Our law firm works exclusively with clients who’ve had life insurance claims wrongfully denied. If your claim was denied due to nonpayment or policy lapse—even if it seems like the insurer followed the rules—don’t give up. We’ll evaluate your case, investigate the facts, and work to secure the full payout your loved one intended.
Free Consultations. No Fee Unless We Win.
Call us today. The consultation is free, and you’ll owe us nothing unless we recover money for you.