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Does Your Life Insurance Policy Require That a Notice of Premium Lapse Be Sent to a Secondary Address Before Termination?

One of the most common ways that life insurance companies avoid claims is to terminate coverage when someone fails to pay their premium.  This is called “lapse,” and a policy may be canceled for failing to pay the premium.  However, in some states, life insurance companies have to send a premium notice to a secondary address before they can cancel the policy.

An insurer typically has no duty to be sure that the insured actually receives a premium notice.  Federal Kemper Life Assur. Co. v. Ellis, 28 F.3d 1033, 1040 (10th Cir. 1994)(construing Kansas law).  This is in large part because life insurance contracts commonly require periodic “mailing” of premium notices, as opposed to delivery.  As a result, the typical issue in play is whether the premium notice was properly mailed.  Best Meridian Ins. Co. v. Tuaty, 752 So.2d 733, 736-737 (Fla. 3d DCA 2000)(question is whether mailing occurred at all where policy states that notices which are mailed are presumed received).   Although the presumption that a premium notice was mailed and received can be challenged, it is very difficult.

A few states have recognized that requiring a notice to a second address is good public policy.  Those states include:

  • California (Cal. Ins. Code § 10113.72)
  • Florida (Fla. Stat. §627.4555)
  • Maine (Me. Rev. Stat. Tit. 24-A, § 2556.1.)

In California, an applicant for life insurance must be given the right to designate at least one person, in addition to the applicant, to receive notice of lapse or termination of a policy for nonpayment of premium.

In Florida, any person over age 64  who bought a policy  in 1997 or after and if the policy has been in force for at least 1 year, may not be lapsed for nonpayment of premium unless the insurer mailed notice of the impending lapse in coverage to the policy owner and to a specified secondary addressee if such addressee has been designated in writing by name and address by the policy owner.

In Maine, if designated by the insured, a third party must receive notice at least 21 days before the expiration of the grace period.

Unfortunately, these secondary addresses are not required in most states.  However, in the few that require it, insureds should take advantage of the law, and designate the secondary address.


Do you have questions about a life insurance claim that was denied?  Call Life Insurance Attorney John V. Tucker for a free consultation at (866) 282-5260. 

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