Losing a loved one is never easy. On top of the grief, families in New Jersey may face a painful surprise when they try to collect life insurance benefits. Sometimes, the insurance company refuses to pay, saying the policy has lapsed. This means they believe the policy was no longer active because payments were missed. If you are a beneficiary and this happened to you, it can feel confusing and unfair. You are not alone, and there may still be hope. This guide will help you understand what a lapse is, why it happens, and what steps you can take to appeal the denial.
What a Life Insurance Lapse Means in Simple Terms
A lapse in life insurance happens when the person who owned the policy stopped paying the premiums, or payments were not received in time. Once that happens, the insurance company may cancel the policy. If the person passes away after the policy ends, the insurance company might deny the claim. This can be shocking, especially when a family was depending on that money for help with funeral costs, debt, or daily living expenses.
Sometimes, a lapse is real. But in other cases, it happens by mistake. The person may have been sick or confused and missed a payment. The insurance company might not have followed the rules when they ended the policy. This is why understanding how life insurance rules work in New Jersey is so important.
New Jersey Rules That Protect Beneficiaries
New Jersey has special laws that protect people in these situations. One of the most important rules is the grace period. This is a short time after a missed payment when the insurance policy is still active. In New Jersey, the grace period is usually 30 days. That means if the person dies during those 30 days, the policy should still pay out.
Another rule requires the insurance company to send notices before they cancel a policy. These notices must go to the person who owns the policy and to anyone they named as a backup contact. If the insurance company does not send these notices properly, they may not be allowed to cancel the policy.
These protections are meant to help families. But insurance companies may still deny claims. That is when filing an appeal becomes important.
Understanding Why Claims Get Denied
When an insurance company denies a claim because of a lapse, they will send a letter explaining their decision. This is called a denial letter. It usually says the policy was no longer active because of unpaid premiums. It may also list the dates they think the policy ended and when the person passed away.
Reading the denial letter is the first step. Check the dates. Look for mistakes. Ask yourself if the person might have died during the grace period. Think about whether the insurance company gave enough notice before the policy was canceled. If something does not seem right, you may have a reason to appeal.
How to Start an Appeal for a Life Insurance Lapse
Filing an appeal is your chance to ask the insurance company to look again at the claim. The appeal should include a letter explaining why you think the denial was wrong. You can include documents like payment records, letters the insurance company sent, and a copy of the death certificate.
We contacted Trief & Olk to help us with a life insurance issue and Shelly Friedland was the attorney assigned to our case. Before Shelly took our case she explained to us that the likelihood of our success without going to court was possible but not likely. Unfortunately we did not get the outcome we had hoped for but it was our decision to not move forward and have our case litigated. Shelly is very knowledgeable and was very straight-forward in her assessment of our case as we moved forward. She was very patient and thorough in answering our questions. She always responded in a timely manner and listened to our concerns. We would certainly recommend Shelly and would use her firm again in the future.”
- John Ramig
If there is any possibility of winning your life insurance case – this is the place to do it for you. They are efficient, honest and will achieve the best possible outcome.
Shelly Friedland worked on my case where a life insurance policy had lapsed and was even a few days beyond the grace period. Farmers had rejected my claim twice and was unwilling to take a second look. Shelly was able to get them to pay the entire claim without going to court, and the full amount was deposited in my account within a couple months. Highest recommendation.”
- Kathleen Brown
Trief & Olk is a superior law firm. Their attorneys and other legal professionals have a brilliant understanding of the law and the litigation process. They diligently perform their work in an efficient, strategic and cost-effective manner to ensure the best possible outcomes for their clients.
- Christopher Hughes
You should also explain if the person had any illnesses or challenges that may have made it hard to keep up with payments. If you believe the insurance company did not follow the rules, include that too. Being clear, respectful, and organized helps your appeal stand out.
The appeal must be sent within a certain time, usually 60 or 90 days after the denial. That deadline is very important. If you miss it, you may lose the chance to appeal.
When the Lapse Might Not Be Final
Sometimes a lapse looks final, but it is not. If the person paid close to the due date, or if a bank payment was delayed by mistake, the policy might still be active. If the person was in the hospital or had a serious illness, they may have had a hard time managing their finances. Courts in New Jersey have sometimes ruled that policies were wrongly canceled when a person was seriously ill or confused.
There may also be other facts to consider. Did the insurance company try to reach the policyholder before canceling the policy? Did they follow all the steps required by New Jersey law? These questions matter. In some cases, a denial can be overturned if the company made a mistake.
What Happens If the Appeal Is Denied
If the insurance company still refuses to pay after your appeal, you may still have options. You can file a complaint with the New Jersey Department of Banking and Insurance. This state office checks to see if companies are following the law. They can look into your case and help get answers.
You can also take the case to court. This can be a longer and harder path, but sometimes it is the only way to get justice. A judge can review all the facts and decide if the insurance company was wrong. If the court finds that the policy should have stayed active, they can order the insurance company to pay the benefits.
Settlements & Verdicts
Why Timing and Details Matter in These Cases
In cases like these, small details can make a big difference. A single day between a missed payment and the person’s death can decide the outcome. Letters from the insurance company must be sent in the right way and to the right people. Deadlines must be followed exactly. Keeping careful records of what was paid and when notices were received can help your case.
Because these appeals can be complex, many families choose to get help. The appeal process includes legal steps and insurance rules that can be hard to understand on your own. Knowing your rights and how New Jersey law works gives you the power to fight back.
How Families Can Prepare and Stay Strong
Losing a loved one is already stressful. Dealing with insurance issues adds to the pain. It can feel unfair to be left without the support your loved one wanted to give you. But New Jersey law is on your side. The more you understand the process, the stronger your appeal can be.
Take your time to gather everything. Read every letter carefully. Talk to others who may have been involved, such as caregivers, financial planners, or anyone who helped the policyholder. These people may have useful information. Keep all emails, letters, and payment receipts in one place. If you feel overwhelmed or unsure, you do not have to go through this alone. Talking to someone who knows the rules and how insurance companies work can make a difference.
You Deserve a Fair Review and Real Help
If your loved one passed away and the insurance company denied your claim because of a lapse, you may still be able to recover the money that was meant for your family. It is not too late to take action. New Jersey has laws to protect families in your situation. Appeals can succeed, especially when policies were canceled unfairly or without proper notice.
At Trief & Olk in New Jersey, we help families understand their rights when facing a denied life insurance claim. If you need help with filing an appeal for a life insurance lapse in New Jersey, we can stand with you and fight for the benefits your loved one intended you to receive. Reach out today for a free consultation and let us help you take the next step forward.
