In one recent success, we recovered $429,000 on a denied claim with Global Atlantic Life Insurance, which had improperly asserted that the policy had lapsed. If you’ve received a similar letter, don’t assume it’s the final word. There’s a good chance you can fight back—and win.
What Does It Mean When a Life Insurance Policy Lapses?
A life insurance lapse means that the insurance company claims the policy ended because the policyholder failed to make required premium payments. If they weren’t paid on time—and the grace period expired without payment—the insurer will argue that the coverage was no longer active when the insured died.
That’s their side of the story. But from a legal perspective, whether a policy truly lapsed is not always clear-cut. In fact, it often hinges on the insurer’s ability to prove they complied with both state law and the terms of the policy regarding cancellation. If they failed to follow those rules to the letter, the denial may be entirely invalid.
How Grace Periods Protect Policyholders
Most life insurance policies include a grace period—usually around 30 days—after a missed payment. During that time, the policy remains in effect, and the insurer is still on the hook if the insured passes away. It gives policyholders a cushion to catch up on payments without immediately losing coverage.
However, insurers sometimes pretend the grace period doesn’t apply. They may argue that it expired earlier than it actually did or that the policyholder made no attempt to pay. These arguments often fall apart under scrutiny. One of the first things we do when investigating a lapse-based denial is request all documents showing when the payment was missed, when the grace period started and ended, and what notices were sent in between. It’s common to find errors.
Legal Requirements Before Cancelling a Life Insurance Policy
Life insurance companies are not allowed to cancel a policy silently or haphazardly. Each state imposes regulations requiring insurers to take specific steps before declaring a lapse. If these obligations weren’t met, the policy could still be considered active—even if premiums weren’t paid.
Depending on the state, insurers may be legally required to:
Send timely premium notices and clear billing reminders
Provide formal written warnings of pending lapse or cancellation
Notify any third-party designee the policyholder named for backup communication
Clearly outline reinstatement rights and steps to avoid termination
Failure to provide these notices can completely invalidate the lapse and reinstate the claim. Insurance companies know this—but they’re banking on you not knowing your rights.
Common Reasons Why “Lapse” Denials Are Wrong
Insurers frequently make avoidable mistakes that lead to wrongful claim denials. These errors are often discovered only when an attorney forces them to provide internal records.
Frequent insurer missteps include:
Sending lapse notices to outdated or incorrect addresses
Failing to send any notice at all
Ignoring valid automatic payment setups
Misapplying payments to the wrong policyholder account
Denying a timely reinstatement request without justification
We’ve handled many cases where a single clerical mistake—like a typo in an address—caused an entire family to be misled about coverage. The good news? These kinds of issues can often lead to the policy being reinstated retroactively, and the claim being paid in full.
Why Courts Frequently Side with Beneficiaries in These Cases
State laws are often very strict when it comes to the cancellation of life insurance. Courts don’t give insurers leeway when they fail to follow those laws exactly. If a company sends the notice late, sends it to the wrong address, or leaves out a required warning to a third-party contact, they’re in breach of both contract and law.
Judges and juries recognize how critical life insurance is to grieving families. They are often sympathetic when an insurer tries to hide behind technicalities—especially if there’s evidence that the insurer caused or contributed to the missed payment. Even in cases where the policyholder missed multiple payments, insurers have been forced to pay because of a flawed cancellation process.
Real Scenarios Where Denials Based on Policy Lapse Are Reversed
We have successfully challenged denials in all of the following types of cases:
The insured passed away during the grace period
Lapse notices were mailed to the wrong address or lost
No notice was sent to the designated third-party contact
A longstanding, never-lapsed policy was canceled after one missed payment
The insurer didn’t follow their own internal cancellation procedures
The insured attempted to pay, but the payment was misrouted or returned
In short, what the insurer claims is a “lapse” is often a failure on their part to fulfill their obligations. And courts take that seriously.
Don’t Accept a Denial Based on Lapse Without a Fight
Insurance companies rely on policyholders and beneficiaries not understanding their rights. They issue denials full of policy jargon, legalese, and intimidation tactics, hoping families won’t question the decision. But if you dig deeper—or better yet, have an attorney do it for you—you may find the insurer made critical mistakes.
An experienced life insurance attorney can demand the insurer’s full administrative record, evaluate whether proper notice was given, and take legal action if the company failed to meet its obligations. You have far more power than you think. And you don’t have to navigate this alone.
Get Legal Help if Your Claim Was Denied Due to Policy Lapse
If your life insurance claim was denied because the insurer claims the policy had lapsed, you may still be entitled to receive the full benefit. We’ve handled countless claims like this and routinely force insurers to reverse their denials. The consultation is free, and we only get paid if we win.
Let us demand the documentation, assess your legal position, and aggressively pursue what your loved one wanted you to receive. Contact us today—we’re ready to help.
Frequently Asked Questions About Life Insurance Lapse Denials
What is a life insurance lapse and how does it affect my claim?
A lapse occurs when premium payments aren’t made and the insurer cancels the policy, claiming it's no longer in force at death. However, this doesn’t automatically mean the claim is invalid. Legal procedures must be followed precisely for the lapse to be valid.
How long is the grace period in life insurance policies?
Most policies have a 30-day grace period, during which coverage continues even if a premium was missed. If the insured dies during this window, the claim is generally still payable.
Can I still get paid if the policy lapsed?
Yes. If the insurer failed to provide proper notice, sent it to the wrong address, or violated state law, the lapse may be invalid. An experienced attorney can challenge the denial.
What if the insurance company never sent a lapse notice?
Failure to send a required notice can void the lapse. Most states require written warnings and, in some cases, notice to a third party. If these weren’t sent, you may have a strong case.
Can automatic payment failures lead to wrongful lapse denials?
Absolutely. If the insured had autopay set up and it failed due to bank error or insurer mistake, that often undermines the validity of the lapse.
How do I know if my loved one’s policy really lapsed?
You’ll need documentation from the insurer: billing records, lapse notices, reinstatement options, and proof they followed legal procedures. If they can’t provide these, the denial may not stand.
Are life insurance companies legally required to send warnings before canceling?
Yes. Most states require advance warning, including information about rights to cure the default. If they skip this step or handle it improperly, you can challenge the cancellation.
Does a change of address excuse the insurer from notice requirements?
No. Insurers must make reasonable efforts to reach the policyholder and should act on any updated contact information. Sending a notice to the wrong address often invalidates the lapse.
Can I reinstate a policy after it lapsed?
In some cases, yes—especially if the lapse was recent and you can pay back premiums. However, once the insured has died, reinstatement isn’t an option—but the denial can still be fought.
What happens if the insured died during the grace period?
The policy is still considered active, and the claim should be honored. Insurers sometimes dispute the grace period timeline, but they can be forced to pay if challenged properly.
Is a single missed payment enough to cause a lapse?
Not necessarily. Especially if the insured had no prior history of missed payments, courts may find that the insurer acted unfairly in canceling the policy after just one issue.
How can a life insurance lawyer help with lapse denials?
An attorney can investigate the insurer’s conduct, demand records, cite applicable state laws, and file suit if needed. Many claims that were denied are later paid once legal pressure is applied.
Do different states have different rules about policy lapse?
Yes. State insurance laws govern how and when policies can be canceled. A lawyer familiar with your state’s laws can use those rules to contest a denial.
Can beneficiaries sue the life insurance company over a lapse?
Yes. If the policy was wrongfully canceled, legal action can be taken to enforce payment of the death benefit.