Life insurance is meant to provide financial protection for the loved ones of an individual after they pass away. However, when a life insurance policy lapses, it can create confusion and concern for the beneficiaries. A lapse in life insurance typically occurs when premium payments are missed, causing the policy to end. This can leave beneficiaries wondering about their legal rights and whether they are still entitled to any benefits. Understanding these rights is important for anyone involved in a life insurance dispute in New Jersey. At, Trief & Olk , we are here to guide you through the legal process and help you navigate the complexities of your case.
When a life insurance policy lapses, it can feel like all the financial security it provided has vanished. Many beneficiaries may not even know that the policyholder missed payments, leaving them blindsided when they find out that the policy is no longer active. If a policyholder intended for their loved ones to receive a payout after their death, the beneficiaries may feel helpless when they learn the coverage has ended. But in New Jersey, beneficiaries have certain legal rights that can help them in these situations, even if the life insurance policy has lapsed.
What Happens When a Life Insurance Policy Lapses in New Jersey
A life insurance policy will lapse if the premiums are not paid within the grace period, which is usually 30 days. Once the grace period ends, the policy is no longer in force, and the insurance company is not obligated to pay out any death benefits. For many beneficiaries, this can be devastating news, especially if they were relying on the life insurance payout to cover funeral expenses or other financial obligations. However, even after a policy lapses, New Jersey law offers some protections to beneficiaries.
In some cases, life insurance companies may allow the policyholder to reinstate the lapsed policy. This often involves paying back the missed premiums along with interest. However, reinstatement is not always an option, especially if the policyholder has passed away. If the policy cannot be reinstated, beneficiaries may still have legal recourse to pursue a claim for the benefits.
The Importance of Clear Communication
One of the key factors that can affect the outcome of a life insurance dispute is communication. If the insurance company did not provide proper notice to the policyholder before the policy lapsed, the beneficiaries may have grounds to challenge the lapse. New Jersey law requires insurance companies to notify policyholders before their policies are canceled due to missed payments. The notice must clearly inform the policyholder that their policy is in danger of lapsing and give them an opportunity to bring the account current.
If the insurance company fails to send this notice, the beneficiaries may be able to argue that the policy should not have lapsed in the first place. In some cases, courts may find that the insurance company acted improperly and order the company to pay the death benefit even though the policy had technically lapsed. Beneficiaries should gather all relevant documentation, including any notices sent by the insurance company, to determine whether proper communication took place.
Fraud or Misrepresentation by the Insurance Company
Another way beneficiaries in New Jersey can protect their rights is by investigating whether there was any fraud or misrepresentation by the insurance company. Life insurance companies are required to act in good faith when dealing with policyholders and beneficiaries. If an insurance company misled the policyholder about the status of the policy or wrongfully canceled the policy, the beneficiaries may be able to take legal action.
For example, if the insurance company told the policyholder that they did not need to worry about making a payment because their account was in good standing, but later canceled the policy anyway, the beneficiaries may have a case. Fraud or misrepresentation can also occur if the insurance company fails to disclose important information that affects the policy. Beneficiaries who believe they have been misled by an insurance company should consult with an attorney to explore their legal options.
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
Challenging a Life Insurance Lapse in Court
If a beneficiary in New Jersey believes that a life insurance policy was wrongfully allowed to lapse, they have the right to challenge the lapse in court. This process can be complex, but it may result in the reinstatement of the policy or a payment of the death benefit. A court may review whether the insurance company followed all legal requirements before allowing the policy to lapse, including providing proper notice and giving the policyholder a fair opportunity to make payments.
In some cases, the court may also consider the policyholder’s intent. If the policyholder clearly intended for their beneficiaries to receive the life insurance payout but was unable to make payments due to circumstances beyond their control, the court may rule in favor of the beneficiaries. For example, if the policyholder was incapacitated or otherwise unable to manage their finances, the court might determine that the lapse should be reversed.
The Role of Legal Assistance
Dealing with a lapsed life insurance policy can be overwhelming for beneficiaries. The legal process involved in disputing a lapse can be confusing, especially for those who are grieving the loss of a loved one. This is where legal assistance can play an important role. Beneficiaries have the right to seek legal help to navigate the process and ensure their rights are protected.
Attorneys who are experienced in life insurance disputes can help beneficiaries understand their rights and gather the necessary evidence to support their case. They can also represent the beneficiaries in court and negotiate with the insurance company on their behalf. With the right legal guidance, beneficiaries may be able to recover the benefits they are entitled to, even if the policy has lapsed.
20% The annual average number of life insurance claims denied. $50 Million The yearly average dollar amount of claims denied by life insurance companies. .2% The number of claims appealed annually by consumers.Life Insurance Denial Statistics
Steps Beneficiaries Can Take After a Life Insurance Lapse
If a life insurance policy has lapsed, beneficiaries should act quickly to protect their rights. The first step is to gather all relevant documents, including the life insurance policy itself, any correspondence from the insurance company, and proof of payments made by the policyholder. This information will be crucial in determining whether the lapse was lawful and whether there is a possibility of recovering the benefits.
Next, beneficiaries should contact the insurance company to inquire about the status of the policy and whether reinstatement is an option. If the insurance company refuses to reinstate the policy, beneficiaries should seek legal assistance to explore their options. An attorney can help beneficiaries understand whether they have grounds to challenge the lapse and what steps they need to take to pursue a claim.
Beneficiaries should also be aware of any time limits that may apply to their claim. In New Jersey, there may be deadlines for filing a claim after a life insurance lapse, so it is important to act quickly. Failing to meet these deadlines could result in the loss of the right to recover any benefits.
Life insurance disputes can be emotionally and financially challenging for beneficiaries. When a life insurance policy lapses, it can feel like the security that was promised has been taken away. However, New Jersey law offers beneficiaries certain protections that can help them recover the benefits they are entitled to. Understanding these legal rights is essential for anyone involved in a life insurance dispute.
At Trief & Olk, we understand the difficulties beneficiaries face when dealing with a lapsed life insurance policy. Our experienced team is here to provide the guidance and support you need during this challenging time. Whether you are looking to challenge a policy lapse or seek reinstatement, we can help you navigate the legal process and fight for the benefits you deserve.
If you are a beneficiary dealing with a lapsed life insurance policy in New Jersey, don’t hesitate to reach out to Trief & Olk for a consultation. Our team is dedicated to helping you protect your rights and recover the financial support you were promised. Contact us today to learn more about how we can assist you in your life insurance dispute.