Failing to Pay Life Insurance While Disabled


Hi. I’m Indiana personal injury attorney David Holub.

Life insurance policies are designed to protect the people we leave behind.

When we buy life insurance, we realize that premiums have to be paid, but what happens if we become incapacitated and the premiums do not get paid?

How do the survivors know what to do to make a benefit claim when we do die?

These are two separate but related issues, so let’s break it down.

An example will help.

Suppose you’ve been paying on life insurance for 20 years and you faithfully keep up your premiums. But then you suffer a stroke and are in the hospital for three or four months and you cannot communicate. If the premiums are not paid during that time, the policy may very well lapse. You have paid faithfully for insurance, hoping to protect the people you leave behind, only to now find that they have no clue that they must keep the policy paid up.

This situation happens more than you might think. Family members might look at a checkbook and find that checks have been written to an insurance company and track down that premiums must be paid. But where do they send the checks?

If the family member is thinking clearly, they’ll see an attorney and the attorney can help sort things out and get the premiums back on track.

Often there are grace periods of between three months to six months. So back premiums could be paid and the policy reinstated.  

If an insurance company denies a claim on the basis of a policy lapse, there may be a way to reinstate the policy and resubmit the claim.

Additionally, seeing an attorney before making a claim, and paying past due premiums before making the claim, may be something an attorney can assist in doing.

The issue about survivors needing to know how to make a benefit claim is very similar.

Life insurance sales people rarely tell you this, but it is up to you to keep in mind that if you become incapacitated, or die, your beneficiary is going to have to figure out how to deal with paying premiums, and making a claim.

The family members we leave behind often are not thinking about our life insurance situation. They may be emotional and they may be stressed out.

To deal with these issues, and make the process easier for those we are trying to protect with the policy, we suggest creating a file with a copy of the policy and insurance contact information, and copies of paperwork involved with filing a claim.

This file should include info about premiums to be paid, and when premiums are due to be paid.

This file will be helpful for the beneficiary who needs to deal with the insurance company while you are incapacitated as well as if a claim needs to be made.

If the family member cannot figure things out on their own, they can bring this file to an attorney who will help them deal with the issues at hand.

If you would like to learn more about the law, we encourage you to listen to our Personal Injury Primer Podcast where we break down the law into simple terms, provide legal tips, and discuss topics related to personal injury law.

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