Your life insurance policy automatically cancels if you miss your life insurance premium. However, you may be able to work with your insurance provider to sort it out. If you accidentally miss your life insurance monthly payment, you may not need to panic. You still have some options to get it sorted and get your cover back on track.
Check if you have a grace period
Some insurance providers give their customers a grace period if they miss their life insurance premium. Normally, this is around 30 days. If you fail to pay your premium within these 30 days, then your policy automatically cancels. It’s best to check your terms and conditions on your life insurance policy, to see what happens if you miss your monthly payment. You may have some time to call up your insurance provider and pay your premium before the policy cancels.
If you pass away
If someone has forgotten to pay their life insurance premiums, and they pass away it can mean that your family won’t be able to receive the money. Unfortunately, if you become ill and forget to pay your life insurance premium, you may lose out on your policy. You won’t receive any money back from the premiums paid either.
When your policy is too expensive
If you decide that your life insurance policy is too expensive, then there is no fee to cancel your policy. However, in some cases, you may be able to hunt around and find a cheaper policy. You can do the work yourself, or you can approach a life insurance brokerage with qualified advisors who can find a better price for you.
Protect yourself against cancellation
There are some actions you can take to avoid your policy being cancelled if you miss a life insurance premium. You can avoid your policy being lapsed with some small steps.
Waiver of premiums
When you take out your policy, you can opt for a waiver in your premiums when you become ill, disabled or unemployed. Within the terms of your life insurance policy, you can request to have a break in paying your premiums if you meet certain circumstances. Most commonly, a waiver of premiums would state that the person insured is not required to pay the premiums if they meet certain conditions. These conditions normally refer to disability or death. However, you can negotiate a waiver of premium if you lose your ability to generate income. The drawback of this is that it generates a higher premium, therefore you’re likely to pay more each month to get this option.
Set up a direct debit
So that you don’t need to remember each month, you can set up a direct debit with your insurance provider. That way, your monthly life insurance premium comes out automatically. If you no longer wish to have a policy, you can cancel your direct debit at any time.
Mark it on your calendar
If you don’t feel comfortable setting up monthly payments, you can mark it on your calendar. Whether you’re an advocate for Google calendars or you mark it on your family calendar at home, it doesn’t matter. Your life insurance premium will be due on the same date each month, so you can remind yourself a few days before to give you time to clear the payment.
Ask your insurance provider to reinstate your policy
If you’ve already missed your payment and aren’t sure what to do next, you can always contact your insurance provider. It may take some negotiation, or you may pay a price if your policy has already been cancelled. However, if you’ve gone through an insurance brokerage, you can ask them for advice. They may be able to negotiate for you or get you a better deal.
The ability to reinstate your policy will depend on when you first took your cover out and how much time has lapsed in between. If your age and health status has changed, you may be required to reapply for the policy and provide a health statement. If you are out of your grace period, insurance providers are likely to ask this if your policy were to be reinstated.
In some cases, reinstating the policy can help you save money rather than getting a new policy. Especially if your health and age have changed. That being said, your insurance provider is likely to let you reinstate your policy so that you don’t remain uncovered. If you miss a payment of your life insurance premium, don’t lose hope yet. You still have options.