Life Insurance Policy Lapse In Texas

Most people think that the idea of life insurance is good. It shows you are thinking of the people in your life who are left behind. Sometimes, life insurance is purchased for business reasons. People who live in Arlington, Grand Prairie, Weatherford, or a big metropolitan area such as Dallas and Fort Worth are all going to consider life insurance at some point in their lives.
What happens when the idea of purchasing life insurance becomes a reality and after having bought the coverage, payments are missed? The Texas Court of Civil Appeals in San Antonio, decided this issue in 1962, and their decision is still good law for this question.
Merced Cantu et ux., v. Southern Life & Health Insurance Company, is a case that says, “It is not necessary for the insurance company to advise policy holders that their policy has lapsed”. In this case, the Cantu’s had a life insurance policy on their son. The son died and the Cantu’s made a claim for benefits from Southern Life & Heath Insurance Company. Southern denied the claim stating that the policy had lapsed for non-payment of premiums.
The policy at issue provided a date that payments were due and that if the payments were not made on a timely basis that there was a four week grace period to make the payments but at the end of the four week grace period, the policy lapsed and was no longer in force and effect, unless of course the late payments were made during the four week grace period. In this case Cantu made late payments but only not enough to catch the policy all the way current.
The Court ruled that the policy had lapsed according to the wording in the policy and once it had lapsed, the policy was no longer in force and effect and thus there was no coverage when the death of the Cantu’s son occurred.
It is important to realize that the policy itself and the wording within it, was notice to the policy holder of when and how the policy would terminate and the insurance company was not required to mail any sort of termination notice. It is also important to realize that sometimes there are ways of getting around the ruling made by this Court. In these situations it is necessary to seek the counsel of an experienced Insurance Law Attorney to make sure your rights under a policy of insurance are protected.