One of the most common reasons insurers deny life insurance claims is by asserting that the policy lapsed before death. In one recent case, we recovered $429,000 after Global Atlantic Life Insurance claimed coverage had ended. That denial did not hold up once the records were reviewed.
If you have received a similar letter, do not assume the insurer’s conclusion is correct. Lapse denials are frequently based on incomplete facts, missing notices, or failure to follow state law. Many can be challenged successfully.
What Insurers Mean When They Say a Policy “Lapsed”
A lapse occurs when the insurer claims required premiums were not paid and the policy terminated after the grace period expired. From the insurer’s perspective, that ends coverage and eliminates any obligation to pay benefits.
Legally, however, a lapse is only valid if the insurer followed every required step before cancellation. That includes compliance with the policy terms and applicable state insurance laws. If the insurer cut corners, sent notices incorrectly, or failed to warn the policyholder properly, the lapse may be invalid.
Why Grace Periods Matter More Than Insurers Admit
Nearly every life insurance policy includes a grace period, commonly around 30 days. During that time, coverage remains in effect even if a payment was missed. If the insured dies during the grace period, the claim should be paid.
Insurers sometimes shorten this window or miscalculate the dates. In other cases, they argue the grace period expired without providing proof. When we investigate these cases, we often find internal inconsistencies in billing records or notices that were sent late.
Confirming the exact grace period timeline is one of the first steps in evaluating a lapse denial.
Notice Requirements Are Not Optional
Insurance companies cannot quietly cancel a life insurance policy. Most states require specific notices before a lapse becomes effective. These requirements exist to protect policyholders from losing coverage without warning.
Depending on the state, insurers may be required to send written notices that clearly explain:
• that payment is overdue
• when coverage will terminate if not paid
• how to reinstate the policy
• who to contact for help
Many states also allow or require notice to a secondary contact designated by the policyholder. If that notice was not sent, the cancellation may be legally defective.
Insurers often claim notices were mailed, but cannot produce proof they were sent to the correct address or sent at all.
Common Problems That Undermine Lapse Denials
Lapse denials are frequently overturned because insurers make basic errors. These include:
• mailing notices to outdated addresses
• failing to send any cancellation notice
• ignoring automatic payment arrangements
• misapplying payments to the wrong account
• rejecting reinstatement attempts without explanation
We regularly see cases where the policyholder tried to pay, believed coverage was intact, or never received a warning before cancellation. Courts do not look favorably on insurers in these situations.
Why Courts Often Side With Beneficiaries
State insurance laws are strict for a reason. Life insurance is meant to protect families, not disappear because of minor administrative mistakes. Courts often require insurers to show exact compliance with notice and cancellation rules.
If an insurer missed a step, used unclear language, or failed to follow its own procedures, judges frequently rule that the policy remained in force. Even when a payment was missed, cancellation is not automatic.
Situations Where Lapse Denials Are Commonly Reversed
We have successfully challenged lapse denials where:
• the insured died during the grace period
• notices were sent to the wrong address
• no notice was sent to a third party designee
• a long standing policy was canceled after one missed payment
• payments were misrouted or returned due to insurer error
In many of these cases, the lapse existed only on paper, not under the law.
Do Not Accept a Lapse Denial Without Review
Insurers rely on beneficiaries feeling overwhelmed and assuming the denial is final. The denial letters are often filled with technical language meant to discourage further questions.
A life insurance attorney can demand the insurer’s full billing and notice records, compare them against state law, and determine whether the lapse was valid. Many denials collapse once that scrutiny begins.
When to Get Legal Help
If your claim was denied because the insurer says the policy lapsed, it is worth having the decision reviewed. These cases are highly technical, but they are also some of the most frequently overturned.
An experienced life insurance attorney can identify notice failures, grace period errors, and administrative mistakes that insurers hope will go unnoticed. In many cases, legal pressure alone is enough to force payment.