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Did You File a Claim as a Beneficiary to a Life Insurance Policy, Only to Be Told the Policy Had Lapsed? We Want to Hear From You!

Every day, our California insurance law firm is hearing from people who notified their insurance company about a covered death under their life insurance policy but were told the policy had lapsed due to nonpayment of a premium. California has strict laws in place that insurance companies must follow before they can terminate a life insurance policy for nonpayment, but insurance companies from across the country fail to adhere to California law when it comes to policies they issue in the state.

The loss of a loved one is devastating enough without the added insult and injury when a life insurance policy that you and the deceased counted on to be there for you is turned aside. If you are being told that your claim is denied because the policy lapsed or was terminated for nonpayment, call Gianelli & Morris for a review. If your policy was terminated illegally, we’ll know it. Our team has decades of experience and success taking on the biggest insurers across the country and holding them accountable when they fail to follow the consumer protection laws and insurance requirements in California and federal law.

How Life Insurance Companies Violate California Laws Regarding Policy Lapses

Of course, a life insurance policy is only valid so long as it is paid up, and insurance companies have the right to terminate a policy for nonpayment of premium. Before they can do so, however, they have to allow the policyholder a grace period to make up a missed payment. Every state has different laws when it comes to grace periods, but California’s laws are exceptional. They are some of the most consumer-friendly laws in the nation. Insurance companies that operate in several states aren’t always familiar with California’s strict requirements, or if they are, they simply ignore them and deny the claim unlawfully. Most policyholders are probably ignorant of California’s laws as well and won’t know that their rights are being violated. That’s why it’s so important to contact a lawyer to review your situation.

In California, insurance companies are required to follow all of the following legal requirements regarding the payment of life insurance policy premiums. If they break any of these laws, they shouldn’t be allowed to terminate a policy for nonpayment of premium:

  1. Policyholders have 60 days after the premium due date to make their payment. All states provide a grace period for late payments, but most state laws only require a one-month grace period, not two months like California. Insurance companies headquartered in other states use their home state’s 30 or 31-day grace period, even on policies they issue in California. This is a clear violation of California law. California insureds have 60 days, and their policy stays in effect during that time. If the insured dies during the grace period, the insurance company must pay.
  2. Insurers are required by law to mail a notice of pending lapse and termination for nonpayment within 30 days after any unpaid premium was due.
  3. Insurers are required by California law to mail a notice of pending lapse and termination at least 30 days before the effective date of termination.
  4. Policyholders in California are allowed to designate at least one individual to receive notice of lapse or termination for nonpayment. Insurance companies are required to annually notify policyholders of their right to designate a person to receive notifications or to change their designee.
  5. The notices required in numbers 2) and 3) above must be mailed to the insured as well as any designees, plus any known assignees on the policy or any other person who has an interest in the policy.

California Law Protects You, the Consumer

The laws described above can be found in the California Insurance Code, sections 10113.71 and 10113.72. The bill adding these sections of the law was passed by the California legislature and signed into law in 2012. Assemblymember Mike Feuer, who authored the bill, highlighted the fact that this law provides consumer safeguards for policyholders, especially seniors, who might have accidentally missed a single premium after paying on time for years or even decades. People who are elderly or dealing with medical issues are precisely the people most likely to miss a premium payment and the people most in need of coverage. They are also the people who would be least likely to be able to reinstate their policy or afford new coverage after undergoing a new physical exam and underwriting requirements.

The protections provided by this law are intended to make sure that policyholders have sufficient warning that their premium may lapse due to nonpayment. This is an issue of fundamental fairness and consumer protection in California that no insurance company, located inside or outside of the state, can violate when issuing policies in the state.

Gianelli & Morris Protects the Rights of Insureds and Their Beneficiaries

The attorneys at the California insurance law firm of Gianelli & Morris go to work every day protecting the rights of insureds and beneficiaries in California. We have already filed numerous class-action complaints against insurance companies that have terminated life insurance policies for nonpayment in violation of California law. We know that other companies are engaging in this unlawful practice as well.

If you have had a policy lapse or terminate for nonpayment or had your claim turned down for this reason, we want to hear from you. Call our passionate and dedicated insurance lawyers at 213-489-1600 for a no-cost consultation to find out if you might have a case that we can help you with.

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