What Happens If You Stop Paying Premiums of Life Insurance?
If you miss life insurance premium payments, your policy could be cancelled. Read more to know about what happens if you stop paying your insurance premium?
A life insurance policy is a failsafe way to guarantee your family’s well-being. In essence, an insurance plan is a contractual agreement between you and your insurer that specifies that if you die, the insurance company will pay a lump sum to your nominees, ensuring a peaceful life for them.
Your insurer pays you as per your insurance plan, but only after you make all of your life insurance policy premium payments. Therefore, it is advisable to plan insurance carefully, keeping all possible factors in mind to make consistent premium payments. A single premium life insurance entails paying a lump sum amount. If you opt for monthly, quarterly, or half-yearly insurance premium payment mode, you can spread out your premiums at chosen intervals throughout the term period. Therefore, it is imperative to plan thoughtfully before purchasing a life insurance policy.
Premium Payment Failure and Its Repercussions
A failure at your end to make the life insurance premium payment will result in a policy lapse. However, a term life insurance policy gives you a grace period that usually lasts 30 days, to complete the pending payments.
Reinstating or Restoring a Lapsed Policy
Once your insurance has expired, it could be a tricky road ahead. There is, fortunately, a way to reinstate or restore the expired coverage. This method differs from one insurer to the other and is determined by the type of policy.
To reinstate/restore a policy, you should consider the following:
Reinstatement Form
If you wish to reinstate a lapsed policy, you should fill out the reinstatement application. It’s identical to the application you filled out when you originally applied for the insurance coverage.
Medical Examination
This differs considerably depending on your insurer. However, in most cases, if your reinstatement application is submitted within 90 days of the grace period’s completion, you do not require medical examinations.
Latest Health Condition
Most firms will inquire about your existing health situation. In addition, they intend to evaluate if anything has altered since you submitted your initial application.
Avoid Premium Payment Failure with These Steps
Life insurance policy premium payments are a full-time commitment and an important element of your financial plan. To prevent payment failures, one must understand how to plan insurance.
Decide On the Type of Coverage
Planning for insurance starts by researching the type and form of coverage you require. A full coverage insurance plan is the best option for individuals with significant financial resources as it usually comes with higher premiums. However, you also have an option to buy a minimum life insurance coverage policy. In fact, ‘what is the minimum life insurance policy is a frequently asked question. This type of plan provides coverage for a period ranging from 5-20 years, resulting in reduced monthly premiums.
Automated Payment System
Choose an automatic payment method that pays your monthly insurance premium on time, so you don’t have to worry about missing the payment deadline.
There’s no denying that timely premium payments are critical to ensuring the continued safety of you and your loved ones. However, if you miss a life insurance premium payment, you get an opportunity to make up for the delay during the grace period. Therefore, the best approach to prevent such payment failures is to plan insurance thoroughly and learn how to plan life insurance most appropriately right from the start.
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Life Cover till 85 years for Life & Life Secure Option
3 Payout Options
Special Rates for Women
Option to exit the policy with premium refund at the age of 60*
