California Life Insurance Lapse: Lawyer Explains the Law and the Insurance Company’s Duties
A lapse in life insurance coverage is one of the most common reasons insurers deny death benefits. While some lapses are legitimate—such as long-term nonpayment of premiums—many are not. Across the country, life insurance companies must follow state-specific rules before terminating coverage. California’s rules are among the strongest in the nation, designed to protect vulnerable policyowners and prevent wrongful claim denials.
Yet insurers often fail to follow these rules. Many beneficiaries receive abrupt denial letters stating that “the policy lapsed for nonpayment,” even when the insurer never followed California’s strict notice requirements.
In this guide, our life insurance attorneys explain California’s life insurance lapse laws, the duties imposed on insurance companies, and what you can do if your claim was denied due to alleged nonpayment of premiums. If your claim was denied, call (888) 510-2212 for a free consultation.
Why Life Insurance Lapses Happen — And Why Many Lapses Are Wrongful
Like all contracts, life insurance policies require timely premium payments to remain in force. However, California recognizes that policyowners miss payments for many reasons:
hospitalization
dementia or cognitive decline
mail delivery problems
a change of address
temporary financial hardship
misunderstanding of payment schedules
reliance on auto-pay that stopped without their knowledge
Because missed payments often occur during periods of illness or vulnerability, California law imposes strict protections to prevent an insurer from quietly or improperly terminating coverage.
Many beneficiaries do not even know these protections exist—insurance companies rarely volunteer the information.
California’s Life Insurance Lapse Law: Strongest Consumer Protections in the U.S.
Few states impose as many duties on insurers as California does. Under California Insurance Code §§ 10113.71 and 10113.72, insurance companies must take several steps before terminating a policy, including sending multiple notices to multiple parties and providing extended grace periods.
If insurers fail to follow even one of these duties, the policy cannot lawfully lapse, and the death claim must be paid.
California Insurance Company Duties Before Lapsing a Policy
Below are the core protections every California policyowner is entitled to.
1. Mandatory Right to Third-Party Notice
Insurers must give the applicant an opportunity to designate at least one additional person to receive lapse and termination notices. This helps protect policyowners who are:
elderly
hospitalized
mentally impaired
unable to open mail
temporarily incapacitated
California requires insurers to:
obtain the third-party designation at the time of application
send annual reminders allowing the policyowner to add or change designees
If an insurer failed to follow these steps, it cannot lawfully terminate the policy.
2. Mandatory 60-Day Grace Period (Not 30 Days)
California requires a grace period of at least 60 days—double the common 30-day grace period found in many states.
Coverage continues during the grace period, even if no premium is paid.
If the insured dies during this period, the insurance company must pay the death benefit (minus the overdue premium). Any denial of a claim during the grace period is usually unlawful.
3. Mandatory Written Pending Lapse Notice
Before a policy can lapse, the insurer must send a clear written notice to:
the policyowner
the designated third party (if any)
any additional authorized recipient
The notice must:
warn of impending lapse or termination
state the amount due
include the deadline to avoid lapse
be mailed at least 30 days after the premium due date, but no later than 30 days before the lapse date
A notice mailed after the policy lapses does not count.
If the insurer sent the notice to the wrong address—or failed to send it at all—the policy cannot lapse under California law.
These errors can cause wrongful policy lapses.
If the Insurer Violates Any California Lapse Law — The Policy Cannot Lapse
California courts have repeatedly held that failure to comply with any of the required protections makes a termination invalid. This means:
✅ Coverage remains in force
✅ The death claim must be paid
❌ Insurers cannot rely on “lapse” as a denial reason
Many wrongful denials are overturned once the lapse process is investigated.
Common Problems in California Lapse-Related Claim Denials
Beneficiaries often receive denial letters that:
contain no dates
do not state when the last premium was paid
do not identify when the grace period began or ended
fail to mention whether a third-party notice was sent
simply state “policy terminated”
These vague letters are red flags. In California, life insurers must provide detailed and accurate lapse information.
If they do not, the denial is suspect—even likely unlawful.
What to Do If a California Life Insurance Company Denied Your Claim Due to Lapse
1. Do NOT accept the denial at face value
California lapse laws are complicated, and insurers frequently get them wrong.
2. Request the entire claim file
This includes:
lapse notices
proof of mailing
payment history
application and designation forms
internal notes
grace period calculations
Many denials fall apart once documents are reviewed.
3. Contact a life insurance lapse attorney
These cases are highly technical. A lawyer can determine:
whether the insurer followed all statutory requirements
whether the notice was sent on time
whether the policy was still in force
whether the insurer misapplied payments
We have overturned numerous denials by showing that insurers violated one or more California lapse requirements.
Why California Lapse Laws Matter for Beneficiaries
California enacted these protections because many policies lapse when policyowners are:
severely ill
hospitalized
in assisted living
experiencing cognitive decline
overwhelmed by health crises
These individuals are at the highest risk of missing a payment, and California law intends to safeguard them—not punish them.
If your loved one died during illness or incapacity, it is essential to review whether the insurer followed every legal duty before denying the claim.
Get Help with a Life Insurance Lapse Denial
If your life insurance claim was denied due to lapse, you may still be entitled to benefits. Our attorneys have extensive experience overturning wrongful lapse-related denials and forcing insurers to honor the coverage.
We work on a contingency fee basis—you pay nothing unless we win.
Call (888) 510-2212 for a free consultation with a life insurance lawyer.
