A lapse means a life insurance policy is no longer an active contract. A life insurance policy will lapse when premium payments are missed and cash surrender value is exhausted on a life insurance policy. The term lapse refers to a “lapse in coverage”, meaning the life insurance contract will no longer pay a death benefit or provide any insurance coverage for the insured person. A policy will only lapse after a grace period has passed, and in some cases it is possible to have the policy reinstated.

Grace Period Must Expire Before Lapse

To prevent a life insurance policy from lapsing each and every time a premium payment is slightly late, every state in the country requires that a life insurance policy first go through what is known as a grace period after a payment is missed. This is a period of time (usually 30 days) where despite the missed payment, the insurance policy will still provide coverage and make a full payout if the insured dies.

Only after the grace period has passed without receiving the due premiums can the life insurance company consider the policy to be lapsed. Once a life insurance policy lapses the life insurance company is not under any legal obligation to pay the beneficiaries if an insured person passes away.

We Will Fight For You

You can trust The DiGeorge Life Insurance Law Firm to fight on your behalf and get you the best possible result. Feel free to call (800-210-5397) or email us now for a Free Case Evaluation. Our life insurance dispute lawyers work on a contingent fee basis. This means that we do not charge legal fees unless we collect proceeds for you.