What to Do if a Life Insurance Policy Lapses

A life insurance policy lapse occurs when premium payments are missed and the coverage is no longer in force. This situation can be especially troubling for beneficiaries who were relying on the policy’s benefits. If a loved one’s life insurance policy has lapsed, it may seem like there’s no way to recover the death benefit. However, depending on the circumstances, it might still be possible to reinstate coverage or challenge the lapse. In this guide, we’ll explore why policies lapse, what steps you can take if a policy has lapsed, and how Florida’s laws can impact your options. Contact our life insurance attorneys if your life insurance claim was denied because the policy allegedly lapsed.

What Causes a Life Insurance Policy to Lapse?

Life insurance policies typically lapse due to non-payment of premiums. If the policyholder misses one or more payments, the insurer may cancel the policy, leaving the beneficiaries without coverage. Common reasons for lapses include:

• Unintended oversight, such as forgetting to make a payment
• Financial hardship that prevents the policyholder from paying premiums
• Loss of contact with the insurer, leading to missed billing notices
• Automatic deductions from a bank account that has insufficient funds

In some cases, the lapse is not the fault of the policyholder. For example, if the insurer failed to provide proper notice of a missed payment or did not follow legal requirements, the lapse may be contested.

Steps to Take If a Life Insurance Policy Lapses

If you discover that a life insurance policy has lapsed, there are several steps you can take to potentially restore coverage or claim the benefits:

1. Review the Policy’s Grace Period

Most life insurance policies include a grace period—typically 30 to 60 days—after a missed payment. During this time, the policyholder can pay the overdue premium and bring the policy back into good standing. If the lapse occurred within the grace period, contact the insurer immediately to reinstate coverage.

2. Check for a Reinstatement Clause

Many policies have a reinstatement provision that allows the policyholder to reinstate coverage within a certain timeframe, often up to three years after the lapse. To reinstate, the policyholder may need to:

• Pay all past-due premiums, plus interest
• Provide evidence of insurability (such as a medical exam)
• Submit a written request to the insurer

Reinstatement can be a cost-effective way to regain coverage without having to purchase a new policy.

3. Determine if the Lapse Was Properly Handled

Insurers are required to follow certain legal procedures before canceling a policy. This includes sending timely notices of overdue payments and allowing the grace period to expire. If the insurer did not follow these steps, the lapse may be invalid. Review the policy’s terms and contact the insurer to confirm that all requirements were met.

4. Contact the Insurance Company

Once you’ve gathered information about the lapse, reach out to the insurer’s customer service or claims department. Ask for a detailed explanation of why the policy lapsed and what options are available to reinstate it. If the lapse occurred due to an oversight or misunderstanding, the insurer may be willing to work with you to restore coverage.

5. Consult a Life Insurance Attorney

If you encounter resistance from the insurer or believe the lapse was not handled properly, consult with an attorney who has experience in life insurance disputes. An life insurance lawyer can review the policy’s terms, determine whether the lapse can be contested, and help you negotiate with the insurer or pursue legal action if necessary.

How Florida Law Impacts Policy Lapses

Florida law provides certain protections for policyholders and beneficiaries when it comes to lapses. For example:

• Notice Requirements: Insurers must send written notice of overdue premiums and allow a grace period before canceling a policy. If these steps were not followed, the lapse may be challenged.
• Elderly Policyholder Protections: Florida’s laws include special provisions for older policyholders. For instance, companies may need to notify a secondary contact (such as a family member or attorney) before canceling a policy due to missed payments, reducing the risk of unintentional lapses.
• Reinstatement Options: Florida courts have upheld reinstatement clauses in policies, allowing policyholders to regain coverage even after a lapse, provided they meet the requirements set forth in the contract.

Understanding these legal protections can help beneficiaries and policyholders take the appropriate steps to restore coverage or challenge the lapse.

When Lapses Cannot Be Reversed

In some cases, reinstating a lapsed policy may not be possible. For example:

• The policyholder has passed away before reinstating the policy.
• The time limit for reinstatement has expired.
• The policyholder no longer meets the insurability requirements.

When reinstatement is not an option, beneficiaries may need to explore alternative financial resources or consider new coverage options for themselves. While it’s not always possible to recover lapsed benefits, understanding your rights and taking timely action can improve your chances of a favorable outcome.

Seek Professional Guidance for Lapsed Policies

Dealing with a lapsed life insurance policy can be stressful, but it doesn’t have to be a dead end. By reviewing the policy’s terms, exploring reinstatement options, and understanding Florida’s legal requirements, you may be able to restore coverage or contest the lapse. If you need help, contact the Law Offices of Jason Turchin today for a free consultation. Our experienced team can guide you through the process, help you challenge improper lapses, and work to secure the benefits you deserve.