Our firm recently recovered a one hundred forty thousand dollar life insurance benefit after Gerber Life denied the claim based on an alleged administrative failure. The insurer argued that coverage had lapsed due to internal processing issues and claimed the policy was no longer in force at the time of death. After a full investigation, we proved the lapse never should have occurred and that the denial was caused by Gerber’s own clerical and communication failures. The claim was paid in full.
This case highlights a growing category of life insurance denials that have nothing to do with suicide clauses, misrepresentation, or excluded activities. Instead, they stem from administrative breakdowns that insurers later try to pin on the policyholder or beneficiary.
How Administrative Errors Lead to Wrongful Life Insurance Denials
Administrative denials occur when coverage exists in substance but fails on paper due to errors made by insurers, employers, agents, or third party administrators. These mistakes often happen quietly, without any meaningful notice to the insured, and are only discovered after a death when the beneficiary files a claim.
In the Gerber Life case, the policyholder had paid premiums consistently and received no lapse notice. Internally, however, the insurer misapplied a payment during a system update and marked the policy inactive. Instead of correcting the error, Gerber relied on that internal record to deny the claim.
Once we obtained payment histories, correspondence, and internal account notes, it became clear that the lapse was purely administrative and legally invalid.
Real Examples of Administrative Errors That Cause Denials
Administrative denials are among the most frustrating because families are told there is nothing to argue. In reality, these denials are often the easiest to overturn once the facts are uncovered.
Here are common scenarios we see repeatedly.
Premium Payment Misapplied or Not Credited
In multiple cases, insurers have accepted premium payments but failed to apply them correctly. Payments may be posted to the wrong policy number, placed in suspense accounts, or rejected during system transitions. When the insured later dies, the insurer claims nonpayment even though funds were received.
Courts routinely reject these denials once proof of payment is produced.
Lapse Notices Never Sent or Sent Incorrectly
Insurers are required to follow strict notice rules before lapsing a policy. We frequently see cases where lapse notices were never sent, were sent to outdated addresses, or were buried in unrelated correspondence. In the Gerber Life matter, no proper lapse notice existed at all.
Without proper notice, a lapse is often unenforceable.
Beneficiary Forms Lost or Never Processed
Another common administrative failure involves beneficiary designations. Policyholders submit updated forms, often after divorce or remarriage, but the forms are never entered into the insurer’s system. After death, the insurer relies on outdated records.
In many of these cases, courts reinstate the intended beneficiary once submission and intent are proven.
Policy Changes Mishandled by the Insurer
Policies are frequently modified due to billing changes, ownership transfers, rider additions, or internal reclassification. If those changes are mishandled, insurers may later argue that coverage was altered or terminated when it was not.
We see this often with child policies, guaranteed issue plans, and simplified issue products like those offered by Gerber Life.
Automated System Errors During Account Transitions
Many insurers migrate policy data between systems. During these transitions, policies can be incorrectly flagged as inactive, unpaid, or incomplete. Insurers then rely on flawed system data instead of actual payment and policy history.
That is exactly what happened in this case.
Why Insurers Deny Instead of Fixing the Error
Once a death occurs, insurers often shift from customer service mode to risk management mode. Rather than correcting an obvious administrative mistake, they look for a technical justification to deny the claim. Internal records are treated as conclusive, even when they are wrong.
Insurers assume beneficiaries will not have the resources or knowledge to challenge a paperwork based denial. That assumption is often incorrect.
Legal Principles That Protect Beneficiaries
Administrative denials are governed by basic contract and insurance law principles.
Insurers cannot benefit from their own mistakes. If premiums were paid, coverage cannot be retroactively voided due to internal errors. If notice requirements were not met, lapses may be invalid. If forms were submitted but mishandled, the insurer may be deemed to have accepted them.
In the Gerber Life case, we relied on:
• Proof of continuous premium payment
• Absence of legally sufficient lapse notice
• Internal inconsistencies in policy records
• Waiver and estoppel principles
Once those issues were raised formally, the denial collapsed.
Why These Denials Are Often Winnable
Administrative denials look final on the surface because they are framed as simple record issues. In reality, they are fact intensive and often expose insurer negligence once records are obtained.
These cases turn on documentation, timelines, and whether the insurer followed its own procedures and legal obligations. When they did not, payment is often required.
Do Not Accept an Administrative Denial at Face Value
If a life insurance claim is denied because the policy allegedly lapsed, was never fully processed, or shows incorrect beneficiary information, that does not mean the denial is valid. Administrative errors are common and frequently reversible.
The one hundred forty thousand dollar Gerber Life recovery is one example of how insurers rely on internal mistakes to deny valid claims. With a proper investigation and legal pressure, those denials can and do get overturned.
If a claim has been denied based on paperwork issues, system errors, or alleged administrative failures, it deserves careful review. In many cases, the policy was enforceable all along.