claim denied due to lapse Archives

Articles Tagged with: claim denied due to lapse

January 12, 2023

Was Your Life Insurance Claim Denied Due to Lapse?

If there was a lapse in coverage, your claim will be denied. But don’t take no for an answer!

Our life insurance attorneys have gotten many clients paid on lapsed policies. Lapse is one of the most common reasons a life insurance claim is denied, however, in many instances we can get the claim denial reversed if we show that the lapse was not the fault of the insured.

Contact us to speak with a life insurance claim lawyer about your claim and find out whether the life insurance company should pay your claim on the lapsed policy. We only take cases on a contingent basis, meaning we do not get paid unless you do, so you have nothing to lose.

How to Get Paid on a Lapsed Life Insurance Policy

Life insurance is a highly regulated industry. Life insurance companies must follow strict procedures when an insured’s premium is late or premiums have not been paid for some time, and the policy lapsed or was terminated. Sometimes they don’t.

The laws that control payment lapse or termination for non-payment of premiums are updated frequently, requiring life insurance companies to update their contracts and procedures. Often they fail to do so, or fail to do so in a timely fashion, and a policy will fall through the cracks.

Frequently, our life insurance lawyers have shown that the life insurance company failed to follow the law and improperly cancelled the life insurance policy. In the case of lapse of employer-provided group life insurance, our life insurance attorneys have shown that the administrator of the group life insurance plan failed to follow the law. In these cases, the beneficiary can be paid despite the lapse in coverage.

Our life insurance attorneys thoroughly investigate each case of lapse to determine whether the lapse was not the fault of the insured. Here are instances where we’ve gotten our clients paid on a lapsed insurance policy.

If the Policy Lapsed Because the Insured Did Not Receive Notice, the Beneficiary May Be Paid

If the insured never received notice of the lapse, or received inadequate notice under the law, you may get the death benefits paid under certain circumstances.

Case Study: where the insured fell into a comatose state and the family never received notice that premiums were past due, only notice of lapse and termination, we were able to get the beneficiary paid.

If you are the beneficiary of a lapsed life insurance policy, you should obtain copies of any notices sent to the insured and contact our experienced life insurance lawyers to evaluate whether your claim can be paid despite the non-payment of premiums.

If the Insured Died During the Policy’s Grace Period, the Beneficiary May Be Paid

The policy documents will set forth the applicable grace period following non-payment of premiums. If the insured dies within this period, the policy is still in effect and the beneficiaries will be paid the death benefit.

In the case of death during the grace period, our life insurance lawyers can likely get your claim paid. We will need to know the date of death and the date of the insured’s last premium payment. We will also need any notices sent to the insured, if available.

If the Policy Lapsed Because the Insured’s Premium Payment was Lost or Delayed, the Beneficiary May Be Paid

If a premium payment was lost or delayed through no fault of the insured and the policy lapsed, the beneficiaries still may be paid.

This often happens when the insured is in the hospital or assisted living and no longer in control of their finances. In these cases, our life insurance attorneys will investigate whether the insured or the insured’s power of attorney received the required notices regarding non-payment.

If the Policy Lapsed Because the Life Insurance Company Failed to Properly Calculate or Apply Flexible or Vanishing Life Insurance Premium Payments, the Beneficiary May Be Paid

Some life insurance policies offer the option of varying premiums payments. While this may be convenient for the insured, it opens the door to administrative error on the part of the life insurance company. If the policy lapses due to this administrative error, the beneficiaries can get paid.

If the Policy Lapsed Because the Insured’s Employer Mismanaged the Group Life Insurance Plan, the Beneficiary May Be Paid

Unfortunately, this is common. Because insurance law is complex and many employers attempt to administer their group life insurance plan lawfully but fail, policies lapse and are terminated through no fault of the insured. In these cases, the policy will pay out.

If you are the beneficiary of an employer-provided group life insurance policy, contact our life insurance lawyers for your free case evaluation. We will investigate and determine whether the employer failed to provide an application for conversion to private life insurance, failed to provide an application for life insurance premium waiver for disability, or failed to send the required notices, whether the employer stopped paying the premiums unlawfully.

If the Policy has a Non-Forfeiture Clause, the Beneficiary May Be Paid Despite Lapse

Some insurance policies include a non-forfeiture clause, which means that if the insured stopped paying premiums, their beneficiary will still receive some of the benefit.

You can think of this as a lapsed policy refund. If coverage lapses, the insurance company will refund part of the premium payments and/or pay the policy’s cash value.

With some policies, coverage will not lapse in case of non-payment. Instead, the policy will remain in place but with a reduced death benefit calculated as a percentage of the premiums that were paid.

What is Lapse in Life Insurance?

When someone buys a life insurance policy, the life insurance company’s obligation to pay out to their beneficiaries is contingent upon whether the insured paid their premiums. A lapse in coverage will occur if the insured fails to pay their premiums. If the policy lapses, the life insurance company will not pay the insured’s beneficiaries.

Call Our Life Insurance Lawyers if Your Claim Was Denied Due to Lapse

If your life insurance claim was denied due to a missed payment, reach out to the life insurance lawyers at Boonswang Law. We will determine whether you can be paid!

August 8, 2019

AARP Life Insurance Claim Denied Due to Lapse – What To Do

Sound familiar? It happens more often than one would think. If this happens to you or someone you love, don’t feel powerless – there is something you can do about it.

Even if Denied, You May Still Receive the Benefits

When someone buys a life insurance policy, whether through AARP or another administrator, the insurance company’s obligation to pay the designated beneficiary is contingent upon whether the monthly premiums have been paid. Simply put, if the policyholder does not pay the insurance company, the insurance company will not pay the beneficiary.

Yet there are exceptions to this general rule. Read on to discover the circumstances under which a beneficiary might yet receive the insurance proceeds even if there is a lapse in payment and the claim is initially denied.

What Happens When There is a Lapse in Payment?

Insurance companies typically have a “grace period” for making late payments, usually around a month from the due date. If the insured fails to pay on time, there is an opportunity to make up that payment and remain covered during this grace period. Be sure to check with the insurance provider to find out whether a cure of the lapse occurred within the policy’s “grace period.”

Keep in mind also that if the insured died just after the lapse in payment, you may be able to recover payment with the help of an experienced life insurance attorney.

What Happens When There is a Lapsed Policy?

If the insured does not cure the lapse in payment within the grace period, the policy itself will “lapse.” This means that the insured is no longer covered under the policy.

Even if the insured had been making premium payments diligently for decades, if he or she missed one premium payment beyond the designated grace period, the policy is lapsed. If the insured dies just one day after the policy lapsed, you can bet that the beneficiary’s claim will be denied.

Even so, you should appeal that denial with the assistance of a seasoned life insurance attorney because there may be a way to get you paid. For example, recently we got a beneficiary’s claim paid in full where the insured, having faithfully paid premiums for over 28 years, was hospitalized with congestive heart failure and missed getting notice in the mail, and the notice itself was not compliant with state law.

In an even more egregious case, an insured paid premiums in full and on time for 15 years before being diagnosed with cancer and undergoing chemotherapy. The insured was never sent notice of non-payment, lapse, or termination, all of which are required by law. Our beneficiary client was paid in full.

Keep in mind that while these are real pay-outs, we cannot guarantee the same result in any other matter.

Following are several defenses available when coverage lapses. These depend primarily on the form of coverage purchased, the timing of the death, and the last premium payment made.

Term Life Insurance

If the insured had term life insurance, frankly, the options are limited. The policy will lapse, and future payments will not restart coverage.

The insured could “reinstate” the policy by contacting the insurance provider. To reinstate, companies generally require the insured to fill out another application and to let them know if his or her health has changed. Additionally, the insurance company may require a new medical exam before reinstating the policy. This depends on how long it has been since the “grace period” ended.

Upon reinstating the policy, the insured will have to retroactively pay the premiums for the time coverage lapsed. This means that the longer the insured wait after coverage lapses, the more money he or she will have to pay before the policy is reinstated.

But even if you are a beneficiary of a term life insurance policy that has lapsed, get in touch. We do everything we can to support an argument that you should be paid anyway. This include looking carefully at all of the facts surrounding the purported lapse, such as the timing of the death with the grace period, whether the required notices were sent, and whether they were sent to the right address, within the time prescribed, and containing all language required by statute.

Permanent Life Insurance

Permanent life insurance is more expensive than term life insurance, but it is also more forgiving of nonpayment. The two types of permanent life insurance are called whole and universal.

As with term life insurance, one option is to reinstate your previous policy by reapplying and retroactively paying the premiums you missed. If you cannot pay the required amount for reinstatement, however, there are two other choices available:

Permanent Life Insurance Policy Death Benefit and Cash Value

Many permanent life insurance policies combine a “death benefit” (i.e. how much the beneficiary gets paid if/when the owner dies), as well as a “cash value.” This cash value functions as a savings investment separate from the death benefit. In this case, you may have the option to “cash out” your life insurance by withdrawing the policy’s cash value (i.e., its accumulated savings) when your death benefit coverage lapses.

Permanent Life Insurance Nonforfeiture Clause

Some permanent insurance policies include a nonforfeiture clause which provides that if the insured stops paying premiums, he or she still receives some sort of benefit.

If coverage lapses, the insurance company will refund part of the premium payments and/or pay the policy’s cash value. With some policies, coverage will not lapse in case of nonpayment. Instead, the policy will remain in place but with a reduced death benefit calculated as a percentage of the paid premiums.

Again, if you are a beneficiary of a lapsed policy, get in touch so that we can see if there are any arguments to be made that you should be paid anyhow.

AARP (Or Some Other Life Insurance Company) Denied My Life Insurance Claim – What Can I Do?

If you are unsure of the reason your claim was denied, the first thing to do is contact an experienced life insurance lawyer to review your case. You may also wish to contact the insured’s insurance agent and ask for details regarding premium payments made, the policy’s grace period, reinstatement options, nonforfeiture provisions, and notices sent. The date of death and the date of the latest premium payment will be especially important facts to have in hand. For your information, AARP is merely the administrator of AARP life insurance policies, and some other company underwrites them.

Don’t take the initial denial of your life insurance claim lying down. Take action, especially if one or more of the following applies to your situation:

You know or believe the policyholder paid all the premiums and yet your claim got denied, or
You think the insurance company failed to notify the policyholder that payment was due, or past due, or lapsed, or,
If you believe, based upon the dates of death and of the last premium payment made, that there was an administrative error causing a lapse in the policy when there should not have been a lapse.

Contact an experienced life insurance lawyer to evaluate possible solutions. This firm gets beneficiaries paid!

February 15, 2019

What Happens When a Life Insurance Policy Lapses?

What does it mean for a policy to lapse?

When a life insurance policy “lapses,” it means that the policyholder or designated payor has not paid one or more required premium payments. Premium payments are required to keep a life insurance policy in force. Policies may require a monthly, semi-annual, or annual payment of a premium.

Most, but not all, states require notices with specific information (designated via state statute) to be sent to the designated payor of the policy when a premium has been missed and a policy is in danger of lapsing. Failure to fulfill these payments can lead to termination of the policy entirely. If the company has not complied with the notice requirements of the state, however, the policy may still be enforced, even if years have passed since the last payment was made.

Illness-Related Insurance Lapses

A common scenario that leads to a policy lapsing is when a policyowner in charge of paying the policy’s premiums falls seriously ill or is facing a decline in mental health. These individuals often miss their premium payments due to their illness. Courts have been willing to take this scenario into account, especially if the policyowner/payor has loyally paid their premium up until the time that he fell ill. The Boonswang Law Firm has extensive experience dealing with these scenarios and have found tremendous success with these illness-related lapse cases.

Reinstating Lapsed Policies

If your policy lapses, there can also be an option to apply for reinstatement of the policy. When one applies for reinstatement, however, the insurance company gets the opportunity to review your most recent medical records to reconsider whether they would agree to insure you. If your application for reinstatement is accepted, this also resets your two-year contestability period. Thus, if the insured dies within two (2) years of the effective date of the reinstated policy, the insurance company may contest or deny payment of the death benefit based on any misrepresentation on the reinstatement application.

Since life insurance policy proceeds are assets upon which many families rely after a loved one has passed on, there are laws in place mandating a grace period when a lapse occurs. Once a premium payment is missed, the grace period begins. Therefore, if the insured dies within the grace period (usually 30 days), the insurer may still be required to pay the death benefit. The grace period also allows time for someone who missed a payment for financial, health, or other reasons to catch up and make the payment before the policy lapses. Once the grace period is over, however, the policy is considered lapsed and the insurance company will deny payment of the death benefit.

An Insurance Lawyer Can Help With Lapsed-Policy Claims

When a beneficiary does not get paid after a life insurance policy lapses, the beneficiary should contact the life insurance lawyers at The Boonswang Law Firm. Many states require insurance companies to notify policyowners that they have missed one or more premium payments. If an insurance company has not followed the lapse notice laws of your state, you may still be eligible to receive the policy’s benefits. Our attorneys are very well-versed in analyzing the lapse notice laws of states throughout the country. Our concentration in this area has helped us hold insurance companies accountable when they have not complied with the law, bringing countless families the financial security that they need by obtaining death benefits that are rightfully theirs.

October 30, 2017

What happens if a life insurance policy lapses due to nonpayment of premiums?

What does lapse mean in life insurance?

Lapsation in insurance is a common problem. Here is the definition of lapse.

When you buy a life insurance policy, the insurance company’s obligation to pay out is contingent upon whether you have paid your premiums. What is lapse? Simply put, if you do not pay the insurance company, they will not pay your beneficiaries due to life insurance policy lapse.

But can you get money back from a lapsed life insurance policy? In some cases, yes. First let’s talk about what happens when the life insurance premiums are not paid.

How long do you have to reinstate a lapsed policy?

Insurance companies typically have a “grace period” for making late payments, usually around a month from the due date. If you fail to pay on time, you can make up your payment (and remain covered during this period). Be sure to check with your insurance provider so you know the length of your policy’s “grace period.”

What happens if your life insurance lapses?

If you do not pay within the grace period of your life insurance policy, the policy will “lapse” (i.e. you won’t be covered.) Even if you have been making premium payments diligently for decades, if you miss one premium payment beyond the designated grace period, your policy is not in effect. If you die a day after your policy lapses, your beneficiary’s claim will be denied.

What happens if I die within the grace period?

In the case of death and a lapsed life insurance policy, we can likely get your beneficiary paid. It is important for them to know the date of death, the date of last premium payment made, and have any notices sent to you on hand.

Can you get money back from a lapsed life insurance policy?

Perhaps – it depends on your form of coverage. Simply put, there are limited conditions when you can get money back from a lapsed life insurance policy.

Term life insurance

If you have term life insurance, your options are limited. The policy will lapse, and future payments will not restart coverage. If you would like to “reinstate” your policy, you must contact your insurance provider. Generally, companies require you to fill out another application and let them know if your health has changed. Additionally, your insurance company may require a new medical exam before reinstating your policy, depending on how long it has been since the “grace period” ended.

Upon reinstating your policy, you will have to retroactively pay the premiums for the time your coverage was lapsed. This means that the longer you wait after your coverage lapses, the more premiums you will have to pay before you reinstate your previous policy.

Permanent life insurance

Permanent life insurance is more expensive than term life insurance, but it is also more forgiving of nonpayment. As with term life insurance, one option is to “reinstate” your previous policy by reapplying and retroactively paying the premiums you missed. If you cannot pay the required amount for reinstatement, however, there are other choices available.

Many permanent life insurance policies combine a “death benefit” (i.e. how much the beneficiary gets paid if/when the owner dies), as well as a “cash value.” This cash value functions as a savings investment separate from the death benefit. In this case, you may have the option to “cash out” your life insurance by withdrawing the policy’s cash value (i.e. its accumulated savings) when your death benefit coverage lapses.

Lapsed Policy Refund

Some insurance policies include a nonforfeiture clause, which means that if you stop paying premiums, you still receive some sort of benefit. You can think of this as a lapsed policy refund. If your coverage lapses, the insurance company will refund part of your premium payments and/or pay you the policy’s cash value. With some policies, your coverage will not lapse in case of nonpayment; instead, your policy will remain in place but with a reduced death benefit calculated as a percentage of your paid premiums.

Can my beneficiary can get paid from my lapsed policy?

If you never received notice of the lapse, or received inadequate notice under the law, in certain circumstances we can get the beneficiary paid the death benefits. For example, where the insured fell into a comatose state and the family never received notice that premiums were past due, only notice of lapse and termination, we were able to get the beneficiary paid.

If you have a lapsed life insurance policy and are unsure of your options, the best thing to do is contact your insurance agent and ask for details regarding your policy’s grace period, whether your lapsed life insurance policy can be reinstated, and whether there are applicable nonforfeiture provisions.

If you are the beneficiary of a lapsed life insurance policy, you also want copies of any notices sent to the insured. It is best to get in contact with an experienced life insurance lawyer to evaluate whether your claim can be paid.