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 Once the grace period ends, the policy is no longer in force, and the insurance company is not obligated to pay out any death benefits.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.Life Insurance Denial Statistics
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.