Articles Tagged with: Claim Denied Due to Lapse
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The Grace Period for Life Insurance Policies

The Grace Period for Life Insurance Policies

Both policyholders and life insurance beneficiaries should know what the grace period is for making premium payments on a life insurance policy. Life insurance companies frequently make administrative mistakes and let policies lapse while still in the grace period. In these instances, coverage should remain in effect and the life insurance company should pay beneficiaries’ claims for the death benefit.

If your claim was denied due to policy lapse or termination, call us. Our life insurance lawyers investigate and find out whether the grace period was in effect and whether coverage remained in place at the policyholder’s death. Let us help you get paid.

What is the Grace Period on a Life Insurance Policy?

The life insurance “grace period” is the time following the premium due date that the policyholder has to pay the premium without negative consequences. Generally, the grace period will be 30 or 31 days following the premium due date, but this is specified in the policy documents for each life insurance policy.

Life insurance is highly regulated under state and federal ERISA law. Life insurance companies are required to provide a grace period for premium payments and to send notices regarding past-due premium payments to the policyholder. If the life insurance did not apply the grace period or cannot show that they sent the required notices to the policyholder, the lapse of the policy can be overturned.

What Happens When a Life Insurance Policy Lapses

If a life insurance policy lapses, life insurance coverage ends. This means that if a policyholder dies after their policy lapsed, the life insurance company will deny their beneficiaries’ claims because there is no coverage.

Life Insurance Denials Due to Lapse

Lapse is one of the most common reasons for life insurance claim denial. Unfortunately, life insurance companies often let policies lapse incorrectly, either by not applying the grace period for premium payments, not sending the required past-due notices or lapse notices, or not applying the disability waiver of premium. 

In the case of employer-provided group life insurance, often employers do not administer the policy correctly and fail to give employees the forms to convert group coverage to individual coverage, or fail to process those forms. 

Identifying Mistakes in a Lapsed Policy

Unfortunately, many life insurance policies lapse due to no fault of the policyholder. In cases where mistakes cause life insurance coverage lapse, we can often get our beneficiary clients paid when we appeal the life insurance claim denial.

If your claim was denied due to lapse, first, determine whether the life insurance policy was a group life insurance policy or an individual policy. Most individual policies are governed by state law, while group life insurance policies through an employer are governed by federal ERISA law.

In either case, a grace period applies to past-due premium payments. If the life insurance company allowed the policy to lapse during the grace period, the beneficiary on the lapsed policy can still get paid. Similarly, if the policyholder made a premium payment within the grace period but the life insurance company did not correctly apply that payment to their account, the beneficiary can still get paid. If the policyholder had flexible or vanishing premium payments and the life insurance company failed to administer that, the beneficiary can still get paid.

If the life insurance company cannot show that it sent the policyholder the required notices of past-due premium payments and notice of lapse, the beneficiary may still get paid. We had a case where the policyholder was in the hospital, not receiving their mail, the policy lapsed, and they died. We were able to get that beneficiary paid. 

If the policyholder was eligible for disability waiver of premium payments and the policy lapsed due to non-payment, their beneficiaries may still get paid. We have had many cases like this and have gotten our beneficiary clients paid.

If an employer failed to give a separating employer the forms to convert group life insurance coverage to an individual policy, or failed to correctly process those forms causing coverage to lapse, the beneficiaries may still get paid. Again, we have had many cases where employers improperly administer coverage conversion causing policy lapse, and we have gotten our beneficiary clients paid.

Talk with a Life Insurance Lawyer if Your Claim Was Denied Due to Lapse

Don’t take no for an answer if the life insurance company denied your claim due to lapse. Keep in mind that life insurance companies are for-profit companies, and they only make money when they collect premiums and deny or delay paying beneficiaries’ claims. For this reason they have little incentive to avoid making mistakes or to check for mistakes in denying beneficiaries’ claims.


Let us check for mistakes for you. We thoroughly investigate each claim, and if the lapse in coverage was not the policyholder’s fault, we can get you paid. We take cases on contingency only to minimize costs to you, and we only get paid if you do. Call us to discuss your case, free of charge.

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Life Insurance Conversion Privilege

Life Insurance Conversion Privilege

What is life insurance conversion privilege, and how does it affect policyholders and their beneficiaries? Find out from the life insurance lawyers at Boonswang Law, who have gotten beneficiary clients paid in every state in the nation when life insurance companies delay or deny claims for death benefits.

If the life insurance company denied your claim for death benefits due to lapse, termination, or failure to convert, call us. Often the lapse in coverage was no fault of the policyholder, and in those cases, we can get you paid. Call us to discuss your case, free of charge!

Life Insurance Conversion Privilege Definition

In general, “conversion privilege” in life insurance is a policyholder’s right to convert a life insurance policy from one type to another without submitting to a medical exam or completing a new application. Conversion privilege may also guarantee the amount the policyholder pays in premiums for coverage under the new life insurance policy. Some policies may also refer to this as a “guaranteed insurability option”.

Types of Life Insurance Conversions

Group to Individual Life Insurance

By far, the most common type of conversion carrying privilege is when an employee or former employee converts their group life insurance coverage through their employer to an individual policy. Conversion privilege guarantees individual coverage regardless of the policyholder’s health, and guarantees premium payments for a specified number of years.

Term to Permanent Life Insurance

Term life insurance is the least expensive insurance someone can purchase because it provides coverage for a set number of years, called the “term,” then expires. If a policyholder wishes to renew their coverage once the term expires, chances are that their premium payment will increase because they have aged and there is greater risk they will die within the policy term.

If a term life insurance policy carries conversion privilege, the policyholder has the option to convert the policy to permanent life insurance without submitting to a medical exam. This option allows a policyholder to maintain coverage even if they suffer health problems near the end of the term.

Conversion privilege in a term life insurance policy will likely have an expiration date, and once the policyholder converts to a permanent policy they will likely pay more in premiums. However, conversion privilege gives a policyholder with health problems the option of maintaining life insurance. If they had to apply for a new policy, their coverage might get denied due to their present health.

There are many types of permanent life insurance, but most commonly they are called “universal” or “whole” policies. 

Life Insurance Conversion Privilege Requirements

In order to convert a life insurance policy, the policyholder must strictly adhere to the terms of the provision in the policy itself. This provision will set forth the required documents, timeline, and due date, which will vary among policies.

If a policyholder fails to comply with the requirements set forth in the conversion privilege provision, they risk losing life insurance coverage. This might be a problem if the policyholder does not have multiple life insurance policies, but chances are the policyholder purchased this coverage for a reason, and unless that reason dissipated, they must carefully follow directions to convert their policy effectively.

Employer Obligations Concerning Life Insurance Conversions

Providing a Policy to the Insured

Federal ERISA law governs employer-provided group life insurance coverage, whether entirely subsidized by the employer or paid in part by the employee. Under ERISA, an employer must provide covered employees with a copy of the policy itself and inform them of the right to purchase accidental death and dismemberment coverage (AD&D coverage) as a rider.

Inform Insured of Conversion & Portability Rights

An employer has a duty to tell a covered employee of their right to continue coverage should they leave employment, and how to do so, in writing. They also must inform them of their right to apply for a waiver of life insurance premium for disability, if they become disabled.

Provide Information on Policy Changes

If any aspect of life insurance coverage changes, the employer must provide notice of that change in writing to all coverage employees.

Should You Convert Your Life Insurance?

Whether you are seeking to convert employer-provided group life insurance coverage to an individual policy, or someone holding a term life insurance policy who is considering converting to a permanent life insurance policy, there are several aspects of coverage to weigh in making your decision.

First, do you need life insurance after you leave your job or your term life insurance coverage expires? If you do, you will either need to convert your existing life insurance coverage or purchase a new policy.

Second, consider whether you will pay less in premiums when you convert than if you should purchase new coverage. This will require some research on your part. Factors such as your current age and health will affect the relative cost of each option.

Last, consider whether the needs of your beneficiaries will be best met by converting your policy or by purchasing new coverage. What are their needs? Is there an end date to those needs or are they continuing? How old is your beneficiary and what is the likelihood they will predecease you? All of these questions must be answered and weighed before you make a decision to convert an existing policy or to purchase new coverage.

Life Insurance Conversion vs Portability

If group life insurance coverage is “portable” an employee can take this coverage with them when they leave employment, and simply pay their employer the premiums. This option is usually available to employees who are younger than 69 and not leaving their employer due to illness, injury, or retirement. Most “ported” group life insurance will cover a former employee until age 70. 

Portability may be a more cost-effective option than conversion for an employee seeking to leave work but maintain life insurance coverage. The employee should compare the cost of premiums, the breadth of coverage, and whether they will need coverage past age 70 in making this decision.

Failing to Convert Your Life Insurance Policy

If a policyholder fails to convert their life insurance policy before the required deadline in term life insurance, or before the date provided in the conversion packet provided by their employer, life insurance coverage will lapse and terminate. This means that the life insurance company will deny a claim for death benefits due to lapse. However, there still may be something that can be done, and the beneficiary should appeal the life insurance claim denial.

Talk with an Experienced Life Insurance Lawyer

Unfortunately, many policyholders and employees get faulty advice from their agent or their employer and fail to effectively convert their policy as they intended. If the failure to convert was no fault of the policyholder or employee, their beneficiaries may still get a payout.

If your claim was denied due to lapse caused by failure to convert, talk with the life insurance lawyers at Boonswang Law. We investigate the cause of the lapse and if the policy would have converted but for the failure of an agent or employer to adhere to their legal requirements, we can get you paid. Call us at (855) 553-9010 to discuss your case with us, free of charge.

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Life Insurance Company Not Paying Full Amount?

This article will explain the common ways in which life insurance companies underpay valid beneficiary claims for death benefits and the reasons why.

If your claim is denied for a valid reason, there may be a way to negotiate a settlement for part of the claim depending upon the reason that the claim was denied. In some instances, settling for a portion of the death benefit is better than getting no payout at all.

If your claim is delayed, you may be entitled to interest. Do not let the life insurance company make money from keeping you waiting for your payout. Get your entire payout, including claim interest.

Our life insurance attorneys can help you if your life insurance claim is delayed or denied. If you are a life insurance beneficiary anywhere in the United States, we can help you get paid. Call us for your free, no-obligation case evaluation. We do not get paid unless you do.

Life Insurance Companies Only Make Money When They Don’t Pay Life Insurance Claims

Life insurance companies are like any other company – they are responsible to their shareholders to make a profit and provide dividends on their investment.

For this reason, life insurance companies will use any excuse to deny or delay paying a life insurance claim for death benefits. Life insurance companies hope that beneficiaries are unaware that they can fight the delay or denial, and will just take no for an answer.

We get beneficiaries’ claims paid every day. Call us for help, and we may be able to get you paid, too.

A Life Insurance Company May Initially Deny a Life Insurance Claim Due to Lapse or Termination, But You May Be Entitled to All or Part of the Death Benefit.

If your life insurance claim was denied because the insured failed to pay premiums and the policy lapsed or terminated, you may still be able to get paid.

Why? Because often the reason that the life insurance policy lapsed or terminated was not the fault of the insured. For example, if the insured was hospitalized and never received the mandated notices of lapse from the life insurance company, the policy may still pay out less the premiums that the insured was responsible for paying. 

Lapse When the Insured Should Have Had Disability Waiver of Premium

If a life insurance policy lapses due to nonpayment of premiums, the insured was entitled to a waiver of premiums due to disability, and the insurance company did not approve the waiver, a beneficiary may be entitled to the full amount of the death benefit.

Lapse Due to Employer’s Improper Administration of Group Life Insurance

If the insured maintained group life insurance through an employer, there are several ways you can get paid the death benefits despite lapse or termination:

  • Employer failed to provide mandated notices for conversion to private policy;
  • Employer failed to provide mandated premium waiver application if the insured became disabled; and/or
  • Employer stopped paying premiums for any improper reason.

Beneficiary problems with employer group life insurance are common. In these cases, a beneficiary may be entitled to the full amount of the death benefit payout.

A Life Insurance Company May Initially Deny a Claim for Death Benefits Due to Misrepresentation, But You May Be Entitled to All or Part of Your Claim.

A life insurance company will deny a claim if there is any indication that the insured misrepresented themselves on the initial application or medical questionnaire, even if the alleged misrepresentation had nothing to do with the cause of death. 

However, there are circumstances under which the beneficiary can get the death benefit minus what the insured would have paid in premiums if the life insurance company knew of the missing fact.

Common mistakes or omissions that a life insurance company will call a misrepresentation include:

  • Misstating year of birth;
  • Misstating address;
  • Misstating employment;
  • Misstating marital status;
  • Omitting a health condition of which the insured was unaware;
  • Omitting any medical condition because the question on the application was unclear;
  • Failing to disclose a past medical condition because the question was unclear.

These are all examples of information that factor in an insurance adjuster’s assessment of the risk that the insured will die within the policy term, and policy premiums are calculated accordingly. 

Those at greater risk of dying within the policy term will pay higher premiums than those at less risk. For example, if an insured misstated their year of birth, such as transposing digits from 1967 to 1976, they will pay less in premiums than if the adjuster knew their real age because someone born nine (9) years later is less likely to die within the policy term. 

In this case, as long as there is no indication that the insured intended to commit fraud, a top life insurance law firm can help you negotiate with the insurance company to be paid the death benefit minus the amount in premiums that the insured would have paid if the insurance company knew their real age.

If Agent Mistake or Negligence Caused the Alleged Misrepresentation, You May Be Entitled to the Entire Death Benefit

It is common for an insurance agent to fill out an application for the insured when the insured visits the agent’s office or the agent comes to the insured’s home to sell a policy. The agent will typically access the life insurance company’s online application, ask the insured questions, and type in the answer.

Under these circumstances, mistakes or omissions are not the fault of the insured and do not constitute misrepresentation:

  • The agent makes a mistake;
  • The agent fails to ask a question and answers it themselves;
  • The agent receives a truthful answer from the insured but inserts a different answer;
  • The agent coaches the insured to answer incorrectly;
  • The agent fails to ask about obvious medical conditions, such as the insured being in a wheelchair, having a cast on their arm, or needing a respirator to help breath;
  • The agent fails to ask follow-up questions if the insured answers in such a way as to indicate there is an underlying medical condition (for example, if the insured takes insulin) but has not disclosed that the person has diabetes.

An experienced life insurance beneficiary attorney can investigate the alleged misrepresentation, and if any of these circumstances apply, you may still be paid a portion or the entire death benefit.

An Insurance Company May Delay Paying a Life Insurance Claim – You Are Entitled to Interest!

Common Reasons Why a Life Insurance Company Will Delay Payout

Life insurance companies must pay claims within a “reasonable” time, otherwise they must pay the beneficiary interest on the death benefit. Typically that means insurance companies will pay valid claims within 30-60 days, but if they delay paying a claim any longer, contact us. We can help you get paid your entire life insurance claim, which could include interest.

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Don’t Take No For An Answer! Our Experienced Life Insurance Lawyers Can Help You Get Paid.

If your life insurance claim has been delayed or denied, we can help. You may still be entitled to partial death benefits, the entire death benefit, or the entire death benefit plus interest. Know that if we take your case, we expect to win! Call to schedule your free, no-obligation case evaluation as soon as you get the sense that you are not getting paid on a life insurance policy.

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What You Need to Know About Life Insurance Waiver of Premium for Disability

Strict and complex state and federal laws govern employer-provided life insurance. Despite heavy regulation, the claims of beneficiaries of group life insurance are often improperly denied.

Having represented thousands of beneficiaries whose claims were delayed or denied, we have found that employers or life insurance companies often run afoul of those laws, causing a lapse in coverage and improper denial of beneficiaries’ claims. 

If your claim was denied but the insured should have been eligible for life insurance disability waiver of premiums, we can help appeal denial of your life insurance claim and get you paid.

For an insured, if you have become disabled and your life insurance company denies your request for waiver of premium payments, you must file an appeal under ERISA. 

For a beneficiary, if your claim was denied due to lapse in coverage caused by non-payment of premiums, you should call us at 1-855-865-4335. It may be that the employer wrongfully ceased paying premiums on behalf of the insured or improperly handled the insured’s request for waiver of premium payments, or the insurance company mishandled the waiver request or improperly denied it. We will find out for you.

These are two of the most common reasons a life insurance claim is denied. In either case, you need an experienced and diligent life insurance attorney by your side to fight for your rights under the employer group life insurance policy and the Employee Retirement Income Security Act of 1974 (ERISA). Give us a call to schedule your free, no-obligation, no-risk consultation. We never get paid unless you do.

What Does Life Insurance Waiver of Premium Mean?

Life insurance coverage usually only continues as long as the premiums are paid. However, a person who is disabled and unable to work may be entitled to continuing coverage under the employer’s group life insurance plan and have the premium payments waived during the period of disability.

Most group life insurance policies will have a waiver of premium provision or a disability premium waiver rider that will set forth the required information and documentation for waiver of premium for disability.

What is the Waiting Period for a Waiver of Premium Rider?

The waiver of premium waiting period varies among insurance companies, but commonly an employee who becomes disabled and is out of work must wait six months before applying for a waiver of premium.  

What the insurance company and the employer does in those six months will dictate whether the insured continues coverage under the policy, or the policy lapses.

Was Your Claim Denied Due to Lapse?

If the insured was disabled and out of work before dying and had employer-provided term insurance with a waiver of premium rider, but a beneficiary’s death benefit claim was denied due to lapse, it might be because the policy lapsed and was terminated improperly. It is common for either the employer or the life insurance company to mishandle or improperly deny the employee’s request for disability waiver of premium payments.

Employer Responsibility for Group Life Insurance Under ERISA

Employers frequently provide group life insurance for their employees as part of their benefit package. Often the group policy also covers the employee’s qualified dependents.

In some cases the employer will pay the premiums on behalf of employees. In others, the employer will pay the premium in part or not at all, and deduct that cost from the employees’ paychecks.

The amount of coverage the employee purchases is usually based upon a multiplier of the employee’s annual salary and will also depend upon whether the employee opts for any supplemental insurance, such as an AD&D (accidental death and dismemberment) rider.

Employers Have a Fiduciary Responsibility to Act in the Best Interests of Employees With Regard to the Group Life Insurance Policy

The employer, or the employer’s human resource department, is responsible for explaining the benefits and responsibilities of the employee under the group life insurance plan.

Unfortunately, employers often fail to provide employees with the policy itself, or with any information about what is a qualified loss and who is a qualified dependent, or even with the application they need to complete and submit to continue coverage under the plan should they become disabled and unable to work. 

In any of these cases, the employer is responsible for any lapse in coverage, and despite that lapse the beneficiary can be paid. For example, in a recent case, we got our client’s death benefit claim paid when the insured was out of work on short-term disability, and the insured’s employer failed to provide an application for waiver of premium or an application for conversion to an individual policy within the required 31-days. 

In another recent case, we got our client’s death benefit claim paid when the insured could not work due to battling colon cancer, and again, his employer failed to provide an application for waiver of premium or notice of the right to convert to an individual policy.

Insurance Company Responsibility under ERISA

The policy provision or rider pertaining to waiver of premium payments due to disability will define “totally disabled,” and every insurance company defines it differently. Usually, the definition takes some form of the following:

A person is “totally disabled” for the purpose of life insurance premium waiver if that person is unable to perform the duties of an occupation for which he or she is qualified by education, training, or experience, and that disability was caused by an injury or illness.

Often life insurance companies deny a premium waiver application and argue that the insured does not meet the definition of “totally disabled”. Then, if the premium is not waived and the insured fails to pay the premium, the policy lapses.

In these cases, we vigorously challenge that decision and argue that it should be reversed and the beneficiaries paid on their claims. We have been very successful in getting denial of disability premium waiver cases reversed and getting our clients paid. 

Insurance Companies Make Mistakes, Too

We have also been successful in getting our beneficiary clients paid where coverage lapsed because the life insurance company:

  • made an administrative error, 
  • mishandled the premium waiver application, or 
  • did not properly apply premium payments to the insured’s account, for example, when the insured had flexible or vanishing life insurance premiums.

We Get Beneficiaries Paid

The experienced life insurance beneficiary attorneys at Boonswang Law can help you find out if the employer or the insurance company was at fault for coverage lapse when the insured should have been eligible for waiver of premium for disability. Call us at 1-855-865-4335 or complete the online contact form, and we will discuss your case with you, free of charge.

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.” Also, the policyholder may have had flexible or vanishing life insurance premiums and the life insurance company failed to properly administer that.

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. Even if your claim cannot be paid in full, the life insurance company may settle for the death benefit amount minus what the insured should have paid in premiums.

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!

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What To Do When a Life Insurance Claim is Denied Due to Lapse

Lapse is one of the most common reasons life insurance claims are denied.

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.

Beneficiaries, take note – if the life insurance company has not complied with the notice requirements of the state, the policy may still be enforced, even if years have passed since the last payment was made. For example, one of our client’s claim was denied ostensibly due to lapse, yet we were able to get her paid. The insured let the insurance company know that he was no longer receiving monthly bills for the premium, yet he continued to make monthly payments. His last premium payment was just short of the amount required, and he died one month later. His beneficiary’s claim was denied. But because we could argue that the insurance company failed to send the required payment, lapse, and termination notices to the insured, it had to pay our client.

Keep in mind that this case study is true, however, we cannot guarantee similar results in any other matter.

Lapse when the Insured is Ill

A common scenario that leads to a policy lapsing is when the insured 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 insured 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. In one such case, the insured paid premiums for 34 years and was diagnosed with dementia in June 2018. The insurance company issued notice in September 2018 of a premium payment due in October, which the wife believed she paid. When the insured dies and the wife’s claim was denied, we used the payment history to show that policy lapse did not occur until six days after the death of the insured, and she was paid the death benefit. Again, these situations are very fact-specific and we cannot guarantee this result in your matter.

Lapse when the Insured had Flexible or Vanishing Life insurance Premiums

Some policies offer the insured options as to the amount they must pay in premiums to maintain life insurance coverage. As convenient as exercising this option may be for the insured, it opens the door to administrative error on the part of the life insurance company. If payments are not accurately applied, the policy can lapse.

Reinstatement of an Insurance Policy After Lapse

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.

Life Insurance Claims Within the Grace Period Will Be Paid

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.

One of our clients was the beneficiary of a policy and her claim was denied due to lapse.  However, the insured had been only three days late on the premium payment, and died three days after that – well within the grace period.  We got our client paid.

In another case we handled, the insured fell into a coma and no one in the family knew of the life insurance policy until they received a notice claiming to be a Lapse Notice, informing of a past-due premium, that the grace period had expired, and that the policy lapsed. There was no information in the Notice indicating when the policy had been paid through, or when the grace period began or ended. Insurance companies are required to provide a 60 day grace period, not concurrent with any time paid coverage is in effect, and must mail a notice of pending lapse to the insured at least 30 days before  the effective date of termination of the policy. We argued that since this insurance company could present no evidence that it had complied with these requirements, the policy must remain in effect, and our client was paid.

Again, keep in mind that although these are real results for real clients, we cannot guarantee the result of any other matter.

If Your Claim Has Been Denied Due to Lapse or Termination, You Need an Attorney to Fight for You

If you have not been paid due to lapse of the life insurance policy, you should contact the national life insurance lawyers at The Boonswang Law Firm.  The problem could be lack of notice – 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 or when they have been negligent in their accounting or administration of the policy, bringing countless families the financial security that they need by obtaining death benefits that are rightfully theirs.

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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.

Was your life insurance claim denied due to lapse? Call the life insurance lawyers at Boonswang Law. We will help you appeal your life insurance claim denial and get you paid if at all possible.

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.

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16 Reasons Life Insurance Won’t Pay Out

People purchase life insurance policies to protect their families and dependents in the unfortunate event of their death. Life insurance policies are valid, legally binding contracts between policyholders and life insurance companies. So, why is the life insurance company not paying out?

These are the sixteen most common reason life insurance companies deny claims:

  1. Nonpayment of Premiums
  2. Death during the Contestability Period
  3. Misrepresentation on Application
  4. Employer Failed to Submit a Disability Waiver of Premium
  5. Problems with the Beneficiary
  6. Policy was included in a Trust or a Will
  7. Denials Due to Suicide Exclusion
  8. Policy Included a Drug or Alcohol Exclusion
  9. Death Due to other Policy Exclusion
  10. Death Due to Act of War or Terrorism
  11. Death Resulted from Extreme or Dangerous Activities
  12. Death Due to Homicide
  13. Death While Living or Traveling Abroad
  14. Policyholder Dies Committing an Illegal Act
  15. No Insurable Interest
  16. New or Replacement Policy

Just because your claim was initially denied does not mean you do not have a valid claim. You must fight the life insurance company when they deny your claim. Call our experienced life insurance lawyers at 855-553-9010 to discuss the specifics of your life insurance policy and learn about your options – free of charge

Remember, life insurance companies only make money for their shareholders when they collect premiums and deny or delay paying valid life insurance claims. Here are the sixteen most common reasons life insurance won’t pay out.

1. Nonpayment of Premiums

When the life insurance premiums are unpaid, life insurance coverage lapses, the policy terminates, and claims for death benefits get denied. However, our experienced life insurance lawyers have gotten many beneficiaries paid under these circumstances, especially when nonpayment of premiums is not the policyholder’s fault.

When you buy a life insurance policy, the insurance company’s obligation to pay out is contingent on the policyholder having paid the premiums. If you forget to pay, the insurance company typically provides a “grace period” for making late payments of around one month from the due date. If you do not pay within the grace period, the policy “lapses,” and you will no longer be covered. Even if you’ve been paying diligently for decades, your policy can be terminated after missing one premium payment.

Often, nonpayment of premiums is not the policyholder’s fault. For example, the life insurance company may not have sent the legally-required notices of impending lapse, or cannot show that the policyholder received them.

Lapse in Coverage because Employer Stops Paying Premiums

Sometimes policy lapse and termination happens through no fault of the insured. For example, if ERISA controls, there are many safeguards in place for an insured who does not receive the required notices and application for conversion from their employer, and their employer simply stops paying premiums on their behalf. Beneficiaries can get paid even if the policy lapsed in these circumstances!

Lapse in Coverage because the Employee Went Out on Disability

Again, there are notices that the employer is required to provide an employee if the employee is out of work on disability. The employer may not simply stop paying premiums. The disabled employee may be eligible for waiver of premiums due to disability and their employer should provide them with that application.

Lapse in Coverage Because the Employee Was Unable to Convert the Policy

When an employee leaves a job with group life insurance, they have the option to convert that coverage to an individual policy. Unfortunately, not all employers effectively administer their group life insurance plan, and either the necessary paperwork is not given to the employee or that paperwork is not properly completed or filed with the life insurance company.

2. Death During Contestability Period

In most states, the first two years of a life insurance policy are considered the “contestability period.” If the policyholder dies shortly after purchasing life insurance during the contestability period, the life insurance company has the right to review and fact-check information on a life insurance application for accuracy. They perform a full investigation of the policyholder’s medical records and any other information requested on the application.

If the life insurance company finds any false statements or omissions, they have the power to  retroactively cancel the policy and refund premiums instead of paying the beneficiaries’ claims for death benefits.

Unfortunately, this is a common tactic among life insurance companies, even when the misrepresentation in question is unrelated to the insured’s death. All too frequently, otherwise valid life insurance claims are denied due to an innocent mistake on the application.

Do not take no for an answer! Our life insurance lawyers investigate alleged misrepresentation and are often able to get our clients paid. For example, we got our beneficiary client paid in full when the insured died within the contestability period of heart failure.  We argued that the insured had no history of heart failure, did not know they had a heart condition, and could not have disclosed an unknown heart condition.

Death Due to Self-Inflicted Injuries During the Contestability Period

Most life insurance policies contain a two-year “suicide clause,” in which claims can be denied in the event of a policyholder’s suicide. This clause deters people from buying policies with the intention of committing suicide shortly afterward, thereby leaving large life insurance benefits for their family members.

Know that if there is even a possibility that the policyholder died from self-inflicted injuries, the life insurance company will probably deny your claim. Call us – we investigate and may be able to show that the cause of death was something else, or that the policyholder did not intend to harm themselves.

3. Misrepresentation on Application

Life insurance companies frequently rescind policies and deny claims for death benefits due to material misrepresentation on the part of the policyholder, for example, if the policyholder failed to disclose:

  • Past or present health conditions,
  • Past or present medications,
  • Past surgeries,
  • Participation in activities that the insurance company deems dangerous,
  • Financial background,
  • Criminal background,
  • Past or present lifestyle habits such as tobacco use, alcohol use, or drug use.

If you or someone you know is struggling with alcohol or drug abuse call the Substance Abuse and Mental Health Services Administration (SAMHSA) hotline at 1-800-662-HELP (4357) for free and confidential help, 24 hours a day.

If there is false information on your application for life insurance or medical questionnaire, the life insurance company will deny your beneficiaries’ claims despite you having paid premiums all those years. Call your life insurance company to correct any false information and update your information in order to get your beneficiaries paid.

If your life insurance claim was denied because the policy was rescinded due to misrepresentation, call us. We can help.

Agent Error or Omission

We have gotten many client beneficiaries paid when their claim was denied because the life insurance agent made a mistake completing the insured’s initial application for insurance. The life insurance company will deny beneficiaries’ claims due to alleged fraud, when the mistake was in fact the agent’s.

Knowingly Committing Fraud

In most states, a policyholder’s innocent mistake on a life insurance application does not rise to the level of fraud, and the life insurance company should pay beneficiaries’ claims. The life insurance company must show that the policyholder knowingly completed their application fraudulently with the intent to procure coverage or to pay less in premiums.

4. Employer Failed to Submit a Waiver of Premium

If an employee is disabled and out of work, and is covered by group life insurance through their employer, their employer must submit a disability waiver of premium to the life insurance company. If they do not, and the policy lapses due to nonpayment of premiums, the life insurance company will deny the disabled employee’s beneficiaries claims for the death benefit.

We get our client’s claims paid under these circumstances because the lapse was not the policyholder’s fault.

5. Problems with the Beneficiary

Insurance companies invariably deny or delay paying claims when there are one or more of the following problems with the beneficiary:

6. Policy Was Included in a Will or Trust

If a life insurance policy was included in a will and the policyholder’s heirs are different from the life insurance beneficiary designation, this may spark a beneficiary dispute. The same may occur if the beneficiaries of a policyholder’s trust are different from their life insurance beneficiaries.

If the policy names a trust for a minor child or a special-needs child as beneficiary, the policy pays out to that trust.

7. Claim Denial Due to Suicide Exclusion

If a life insurance policy has a suicide exclusion, they will deny beneficiary’s claim for death benefits if the policyholder died from self-inflicted wounds. Suicide clauses differ depending on what state’s law applies to the policy but commonly provide that if the policyholder commits suicide within the first two years of this contract, the beneficiaries will receive a premium refund, but not the death benefit.

One common complication with enforcing suicide exclusions is proving that the policyholder actually committed suicide. It is not uncommon for an insured to die accidentally, resulting in what might look like a suicide.

One case in which we got our beneficiary client paid arose when the policyholder died due to auto-erotic asphyxiation. The autopsy stated that the cause of death was accidental, as the policyholder had laid out clothing for the next morning. The insurance company had the burden of proving that the policyholder “purposefully injured himself” (the wording of the exclusion) They could not as there was evidence the insured intended to survive, and we got our client paid.

Keep in mind that although we were successful in this case and many others, we cannot guarantee the result of any other matter. But we can guarantee that at the Boonswang Law Firm, our attorneys have extensive experience in taking on the challenge of disputing these suicide exclusions. As a result of our skill and knowledge in insurance law, we have been able to successfully obtain death benefits for clients who had previously been denied payment in the face of suicide exclusions.

If you or someone you know is struggling with thoughts of suicide, call the National Suicide Prevention Hotline at 1-800-273-8255 to access their national network of local crisis centers that provide free and confidential emotional support to people in suicidal crisis or emotional distress 24 hours a day, 7 days a week.

8. Policy Included a Drug or Alcohol Exclusion

Many policies have exclusions that will deny claims when the policyholder died due to illegal drug use or overdose on prescription drugs. Some policies also exclude and deny life insurance claims for death related to alcohol use.

Life insurance companies often apply these exclusions and deny claims when marijuana or some other drug was found in the toxicology report. Life insurance companies also will apply the exclusion in cases involving heroin overdoses, when someone took too many prescription pain pills or other medication, or died from alcohol poisoning.

Does life insurance cover drug overdoses? Does life insurance cover death from alcohol? Sometimes. Some states have laws that protect life insurance policyholders who are prescribed narcotics or who are deemed disabled due to addiction to drugs or alcohol.

One recent case in which we successfully got our client beneficiary paid arose when the insured died in a motorcycle accident. The toxicology report stated that the policyholder had “acute amphetamine intoxication” so our client’s death benefit claim was initially denied.  However, ultimately it was determined that the policyholder died of injuries sustained in the motorcycle accident some several weeks later, not from a drug overdose the day of the accident.

Of course, we cannot guarantee the result of any matter. However, our attorneys at The Boonswang Law Firm are extremely knowledgeable in life insurance laws across the country and the nuances one must argue when faced with claim denial due to policy exclusions. Our knowledge and experience help us zealously fight for our clients and get them the death benefits they deserve.

If you or someone you know is abusing drugs or suffers from drug addiction, call the Substance Abuse and Mental Health Services Administration (SAMHSA) hotline at 1-800-662-HELP (4357) for free and confidential help, 24 hours a day.

9. Policy Lists Other Exclusions

Every policy has a set of exclusions, and they differ from insurer to insurer. If there is any chance the policyholder’s death was excluded from coverage, the life insurance company will leap at the chance to deny their beneficiary’s claim.

This is especially the case in Accidental Death & Dismemberment life insurance policies and riders (AD&D), in which life insurance companies define “accidental” death in a manner that is deliberately hard to satisfy. Common provisions are that the insured must die within 90 days of the injury which caused his or her death and that death in an airplane is not covered for pilots.

Recently we settled a case where the insured died of drowning, but he drowned due to an undiagnosed heart condition. We argued that “accident” is an event that is not a natural and probable result of the insured’s own acts. In this case, there was no way the drowning could have been naturally and probably expected or anticipated by the insured because it was caused by his undiagnosed heart condition. Our client got paid.

Life insurance will often not pay out to beneficiaries’ and try to apply exclusions even when they are legally required to pay out. An insured should disclose participating in any activities that are considered dangerous by the insurance company. This might include skydiving, motorcycle riding, mountain climbing, kayaking, surfing, or anything that could be subject to exclusion under some policies. This way, an insured can get the type of policy that is right for them and their lifestyle.

10. Death Due to Act of War or Terrorism

Most policies have an Act of War exclusion allowing the life insurance company to deny claims connected to civilians killed in wars or acts of terrorism. This commonly applies to first aid and other medical volunteers in an area of conflict, journalists, and others who travel to regions of the world where there is armed conflict.

11. Death Resulted from Extreme or Dangerous Activities

“Accidental Death & Dismemberment” policies (AD&D) are commonly sold to policyholders under the impression that if they die of a non-natural, “accidental” cause, a death benefit will be paid to his or her beneficiaries. However, it is common for life insurance companies to deny accidental death claims.

Life insurance companies often define “accident” in an arbitrarily specific manner, in which long lists of provisions must be satisfied before they agree to pay out. Lie insurance companies then deny claims based on a failure to fulfill that list of provisions. Note that AD&D policies never cover self-inflicted death or health-related deaths, since both of these scenarios would not qualify as an “accident.”

We recently settled a matter for our client where the policyholder died from severe injuries he sustained in a motorcycle accident, several weeks after the accident. Our client’s claim was initially denied based on “acute amphetamine intoxication” and benzodiazepine use, although no medical history was available, no autopsy was ever performed, and the medical examiner never viewed the body.

We argued that the insured’s cause of death was the injuries sustained from the accident, having nothing to do with drug use, that foreseeability of the accident is legally irrelevant, and that even deaths resulting from negligence (taking drugs then driving) may still be an accident. We got our client paid!

12. Death Due to Homicide

In most cases, life insurance policies should pay out in the event of homicide. However, there are specific circumstances in which life insurance companies deny a beneficiary’s claim in the event of the policyholder’s murder.

If the beneficiary is under investigation for the homicide of the policyholder, then the beneficiary will not receive the death benefit until cleared of any involvement in the policyholder’s death. If the death is under investigation, the life insurance company delays paying claims until all beneficiaries are cleared of suspicion.

We had one case where the policyholder was murdered. The policyholder was a drug user, and the beneficiary’s claim was denied based on misrepresentation. We successfully argued that the agent did not probe into the policyholder’s drug use while completing the application, that the policyholder was never asked whether he was treated for drug abuse, and that drug abuse had nothing to do with his cause of death. Our client was paid in full.

13. Death while Living or Traveling Abroad

Does life insurance cover overseas death? Perhaps. A policy may specify that if the policyholder dies while living outside the United States, that is an exclusion that results in claim denial. Be sure to inspect your policy for this exclusion if you plan to travel or live abroad.

Be advised that if you die while traveling abroad, the insurance company may delay paying on your beneficiary’s claim while they investigate your death.

14. Policyholder Dies Committing an Illegal Act

This might seem like common sense, but there are plenty of times people do illegal things and don’t realize it. For example, what if you were jogging and unintentionally trespassed on private property? If you had a heart attack and died while jogging, the insurance company will try to deny your beneficiary’s claim because you were doing something illegal when you died.

15. No Insurable Interest

Someone purchasing life insurance covering someone else must have an insurable interest in the insured. If they do not, the life insurance company will deny their claim for death benefits.

16. New or Replacement Policy

If the policyholder replaced their former policy with a new one just prior to their death and failed to check for possible new exclusions, the life insurance company may deny their beneficiaries’ claims for a surprising reason. Similarly, when a policyholder purchases new or replacement life insurance, the contestability period restarts, and the life insurance company is empowered anew to deny claims for inconsistencies or inaccuracies in their application or medical questionnaire.

Talk with a Life Insurance Lawyer About Denied or Delayed Claims

The experienced life insurance lawyers at Boonswang Law have gotten beneficiaries across the nation paid when the life insurance company denied their claims due to these common reasons, among other reasons.

Don’t take no for an answer! If you believe your life insurance or AD&D claim has been unlawfully delayed or denied, don’t hesitate to contact us for your free case evaluation. We get our clients paid!

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When can an insurance company cancel a life insurance policy?

When taking out a life insurance policy, the policyholder aims to provide an extra layer of financial security and peace of mind for his or her loved ones. However, since insurers are incentivized to minimize risk, they will frequently look for reasons to cancel customers’ policies. This can jeopardize the policyholder’s supposed financial security and force him or her to evaluate other alternatives. Misrepresentations during the contestability period, nonpayment of premiums, and termination of employment are three of the most common reasons for which insurance companies may decide to cancel your policy.

The Contestability Period

The contestability period is defined as the amount of time during which an insurance company can review and fact-check information on a life insurance application. It is two years from the effective date of the policy in most states, although some (e.g. Missouri) limit it to one year. The contestability period is usually used as a means for denying claims after the insured’s death, but it can also be used in order to investigate and cancel existing high-risk policies.

If the policyholder left out any information on his or her policy application, such as a previous illness, medical condition, or hospital visit, the insurer has the right to investigate statements on the application and cancel coverage if something was left off. Unless there is reason to believe the application was fraudulent, the insurer has little motivation to do this while the policyholder is still alive and likely to live past the two-year contestability period.

Termination of Coverage/Lapse

The most common situation in which an existing life insurance policy may be cancelled is through nonpayment of premiums, i.e. when you don’t make one or more of your monthly payments. Your coverage is unlikely to terminate if you send payment a few days late, as the vast majority of life insurance policies allow for a “grace period” of at least fifteen days. So long as the insurance company receives payment within the grace period, coverage will remain in place.

However, if the grace period expires, your coverage will lapse; in other words, your policy will be cancelled. In such a situation, you have to contact your life insurance company and meet specific conditions before reinstating your coverage. This often involves retroactively making up all missed premium payments.

Termination of Employment

Many people get their life insurance via so-called “group life insurance plans” through their employer. When you are no longer considered an active employee, your coverage will terminate along with your employment. This is often the case with workers who go on disability and are thus no longer considered “active.” Their coverage may terminate even though they are still technically employed.

In these situations, it may be prudent to request that your insurance provider convert your group policy to a privately owned, individual life insurance policy. This often requires paying high premiums and meeting certain provisions as determined by the company.

If your policy has been momentarily cancelled, you can always reinstate it or buy a new one. When the policyholder passes away before reinstating coverage, however, legal recourse may be the only option. If your loved one’s coverage was wrongfully terminated prior to his or her death, it’s best to contact an experienced life insurance lawyer to evaluate your case.

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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!

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