Understanding What a Policy Lapse Means 
A lapse occurs when the policyholder fails to make scheduled premium payments and the grace period expires without payment. In New York, most life insurance policies must include a grace period of at least 31 days. During this time, coverage remains in place. If the insured dies before the grace period ends, the insurer still owes benefits. Once the grace period passes, the company generally claims the policy is void. While this seems straightforward, the law places significant obligations on insurance companies, and beneficiaries often have grounds to challenge a denial. Why Life Insurance Policies Lapse
Many families are shocked when told that a loved one’s policy was no longer active. They assume the lapse reflects neglect or intentional cancellation. In reality, lapses frequently happen because of circumstances outside the policyholder’s control. A serious illness or hospitalization can prevent a person from managing their bills. Automatic payments sometimes fail due to banking errors. Policyholders may never receive notices if they move or if the company has incorrect contact information. Elderly or incapacitated individuals may lack the ability to manage payments, particularly if the insurer failed to follow required protections. These factors often make a lapse legally questionable.
The Importance of Grace Periods
New York requires that policies include a grace period to protect against sudden loss of coverage. For many families, this period is critical. If a loved one dies shortly after a missed payment, beneficiaries may still recover benefits. Insurers sometimes deny claims even when death occurs within the grace period. These denials can be overturned through legal action. In addition, some insurers establish a history of accepting late payments without enforcing cancellation. Courts may view this conduct as a waiver of strict deadlines, creating additional opportunities to challenge a lapse.New York’s Strict Notice Requirements
Insurance companies cannot simply declare a policy lapsed without following strict notice rules. New York law requires written warnings be sent before cancellation takes effect. These notices must be clear and must reach the policyholder in time to act. Many policies also allow the insured to name a secondary addressee for lapse notices, often a trusted relative or friend. This safeguard is designed to protect older or ill policyholders from losing coverage without their knowledge. When insurers fail to comply with these requirements, courts may rule that the lapse is invalid, obligating the company to pay the claim.How Beneficiaries Can Challenge a Lapse
A denial does not always mean the matter is closed. Beneficiaries have the right to contest the decision and present evidence that the lapse was improper. Legal arguments can include proof that the insurer did not provide proper notices, evidence that the insured was incapacitated at the time of missed payments, or documentation that payments were mishandled. In other cases, courts may examine whether the insurer accepted late payments in the past. An experienced attorney can uncover these issues and bring them before the court, often leading to a reversal of the denial.
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
