When You Miss A Life Insurance Monthly Payment
Missing a life insurance payment happens for many reasons, sudden unemployment, disability, forgetfulness, banking errors or many other reasons. Do your best to pay your premiums when they are due to avoid costly replacement of insurance or a lapse in coverage. But 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.
If You Missed a Payment
First of all, DO NOT avoid your insurance company if you miss a payment or think you may miss one. Speak with your insurance company to see what options they can offer to avoid having your policy cancelled.
If you missed your monthly life insurance premium, then you will probably still have coverage immediately after your payment was due. 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.If you should pass away during the grace 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.
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!
If your policy lapses:
Ask your company for a reinstatement, this may come at a price. You may need to take a medical exam depending on your age difference from the beginning of the policy to the time of the lapse. If your health has change dramatically you will most likely be paying for a new policy and you should shop around.
Protect Yourself from Cancellation
For those times when it gets tough purchase a policy rider that will waive the premium payments during a period of unemployment or disability.
If you have a universal or whole life policy with a cash value 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. Contact your insurance agent or company to learn how to do this.