What Happens when You Miss a Monthly Life Insurance Payment
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UPDATED: Aug 13, 2020
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Life insurance monthly premium payments are required to keep your coverage active. If you miss a monthly life insurance payment, you will need to know the potential consequences and work with your insurance company to resolve the problem.
TIP: DO NOT avoid your insurance company if you miss a monthly life insurance payment! Work with them to avoid having your policy cancelled.
When You Miss Life Insurance Monthly Payment
If you missed your monthly life insurance premium, then you will probably still have coverage immediately after your payment was due. Typically, most life insurance policies have a grace period of 30 days to pay your life insurance premium. After that, the company can cancel the policy and may or may not allow you to pay back life insurance premiums or reinstate the policy. Sometimes this may depend on whether you can provide evidence of good health. Of course if you should pass away during this period and the premium has not been paid and there is no residual value to pay premiums in the policy, the beneficiary would not collect.
How to Protect Yourself from Cancellation
There are several things you can do to avoid losing your life insurance because you have monthly premium payments:
- Purchase a policy rider that will waive the premium payments during a period of unemployment or disability.
- Set up automatic deduction for the monthly life insurance premium payments from a bank account.
- Select the automatic premium loan provision for your life insurance policy. A loan will automatically be taken against the cash value of the policy to pay the premium in the event the policy was about to lapse for nonpayment of premium. This would prevent loss of the insurance protection as long as the policy has enough cash value to pay the premium.
- Ask your company for a reinstatement, this may come at a price. Depending on your age difference from the time of inception to the time of the lapse, you may be required to prove insurability. Meaning, take a medical exam. If your health has change dramatically, it could mean your life insurance premiums are no longer affordable or you will have to go elsewhere for life insurance.
Bottom line, it is best to pay your premium when they are due to avoid costly replacement of insurance or a lapse in coverage!
TIP: If your monthly life insurance payment is too high, find ways to reduce the cost of your policy. If you have a permanent policy, consider switching to a cheaper term life plan. Term life policies offer the same death benefit for less money!
To find the best life insurance premium you will need to shop and compare quotes before you agree to a plan. To get started, visit the Free Advice life insurance quote center today.
Read more articles about understanding your life insurance policy by clicking here.