Is it illegal for a credit life insurance company cancel a policy without notification and still charge the bank for payment?

I got an auto loan 19 months ago with my grandma as the primary and myself as the secondary. I put credit life insurance on it, for a total of about $568 extra, raising my monthly payment about 9-10 dollars a month. When my grandmother passed away unexpectedly, I tried to file a claim but was denied because they cancelled the policy without notifying me. However, if this is true, they have been charging the bank for payments the entire time. To my understanding and with the research I have done, this is illegal? I asked the bank if I have credit life insurance on the policy, and they stated they I do have it, and it has never been cancelled. What can I do about this?