Life Insurance Claim Denied Due to Policy Lapse?
CALIFORNIA INSURANCE LAW FIRM GIANELLI & MORRIS WILL HELP YOU FIGHT BACK AGAINST DENIAL BASED ON MISSED PREMIUM PAYMENTS
Life insurance companies look for any reason they can find to deny coverage. They regularly deny coverage based on policy lapse, which occurs when a policy is terminated due to missed premiums. Insurers cannot simply cancel a policy right after a missed payment and without letting interested parties know. Insurers have a responsibility to policyholders and beneficiaries to give them a chance to keep a policy active even after missed payments. If they fail in that responsibility, either because they did not implement policies in line with state law or because they intentionally allowed a policy to lapse, then beneficiaries are still entitled to coverage under the policy.
If your California life insurance policy claim has been denied and you don’t know what to do, call Gianelli & Morris for a no-cost, confidential consultation. We’ll investigate the circumstances of your claim denial and walk you through your options to obtain the benefits you paid for. If your insurance company rejects coverage just when you need it most, we’ll help you hold them accountable and get you the coverage you deserve.
Coverage Denial for Non-Payment of Premiums
When you purchase a life insurance policy, you agree to pay a certain monthly premium. Life insurance coverage and the continuation of the policy are dependent upon the payment of those premiums. If you stop paying your premiums, then the insurance company may allow the policy to lapse. If a policy lapses before the insured party passes away, then the insurance company can deny coverage on the grounds that the policy was not “active” at the time of the death.
Policy lapse is one of the primary reasons insurance companies use to deny coverage. Just because the insurer claims the policy lapsed, however, does not make it so. Many factors play into whether a life insurance policy was, in fact, inactive at the time of the covered party’s death, including how many payments were missed, when the last payment was due, whether the covered party was given an opportunity to correct missed payments, and whether proper notice was given regarding missed payments and the possibility of a lapse. Moreover, some policies have built-in cash values that can be used to cover missed premiums before triggering the threat of lapse. Talk to your life insurance denial attorney if your benefits were denied based on missed payments to find out if you have grounds to challenge a policy lapse.
How Long Can You Go Without Paying Before a Policy Lapses?
A single missed payment will not immediately render a policy inactive. Life insurance companies are required by law to give policyholders a “grace period” after a missed premium in order to give them time to become current with payments. California Insurance Code § 10113.71 requires life insurers to give parties a grace period of at least 60 days following the premium due date before canceling a policy. During that period, the policy must remain in force, and the policyholder or other interested party can correct the missing payments to keep the policy going.
Grace Periods During COVID-19 Pandemic
California passed several emergency measures to help struggling families during the COVID-19 coronavirus pandemic, including with regard to insurance coverage. Policyholders were given additional grace periods to keep policies active following missed payments under certain circumstances. If you missed a premium due to financial hardship caused by the coronavirus pandemic, you may be able to keep your policy active, and you may be able to obtain life insurance benefits even if your loved one passed after premium payments were missed.
No Policy Cancellation Without Proper Notice
For individual life insurance policies, policy termination at the end of the grace period is only permissible if the insurer mails notice regarding potential cancellation of the policy at least 30 days prior to policy termination for nonpayment of premiums. The notice must be mailed to the named policy owner as well as to a person designated by the policy and to known assignees or other parties of interest. If the insurer fails to give proper notice to the relevant parties, then they cannot terminate the policy, and they must pay out any benefits that are triggered by a coverage event.
Intentional Policy Lapse & Bad Faith
California’s 60-day notice for policy termination was enacted in response to reports that life insurance companies were terminating policies without giving proper notice to policyholders or beneficiaries. Life insurance companies know that elderly individuals are more likely to forget to pay premiums and that they are at greater risk of passing away; it’s more profitable for insurers to let those policies lapse after collecting a lifetime of premium payments and then refuse to pay benefits to beneficiaries.
We’ve seen insurance companies intentionally let policies lapse by mailing a single letter to an elderly policyholder in nursing care, knowing full well that the premiums were being paid by other parties who were also responsible for managing the senior citizen’s financial affairs. Intentionally causing a policy to lapse by burying notice regarding missed premiums may constitute bad faith insurance conduct, and at the very least it raises questions concerning the legitimacy of a claim denial. If your coverage was rejected due to a policy lapse, talk to a seasoned life insurance claim denial attorney to find out if you are entitled to benefits.
Gianelli & Morris Is Here to Make Sure You Get the Life Insurance Benefits You Are Owed
If your California life insurance claim was wrongfully denied, our seasoned life insurance denial attorneys are ready to help. Call the knowledgeable Los Angeles insurance denial lawyers Gianelli & Morris for a no-cost evaluation of your claim at 213-489-1600.