What Happens when You Miss a Monthly Life Insurance Payment

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.

Case Studies: What Happens When You Miss a Monthly Life Insurance Payment

Case Study 1: Sarah’s Lapsed Policy

Sarah had a busy month and forgot to make her monthly life insurance payment. She didn’t realize her mistake until a few days after the grace period had ended. When she contacted her insurance company, they informed her that her policy had lapsed, and she no longer had coverage.

Despite her pleas, the insurance company would not reinstate her policy, and Sarah had to go through the process of applying for a new policy, which resulted in higher premiums due to her increased age.

Case Study 2: John’s Reinstatement

John fell behind on his life insurance payments due to financial difficulties. However, he promptly contacted his insurance company to explain the situation and express his commitment to keeping his policy active. Fortunately, John’s insurance company offered a reinstatement option.

They allowed him to pay the missed premiums, along with any applicable fees, to bring his policy up to date. This case study highlights the importance of open communication with your insurance provider and the potential for resolving missed payments.

Case Study 3: Lisa’s Limited Options

Lisa missed several monthly life insurance payments because she moved and failed to update her contact information with the insurance company.

When the insurance company attempted to contact her regarding the missed payments, they were unable to reach her. As a result, her policy was canceled, and Lisa had to explore alternative insurance options, which proved more expensive due to her older age and potential health changes.