- Life insurance premium notices
- June 9, 2015
By Karla Sullivan
A few states impose an obligation on the insurer to send premium notices to policy owners in that state. In these states, if an insurer fails to the send the required notice, the policy owner has an additional period of time to pay the premium according to McGill’s Legal Aspects of Life Insurance.
Notices must identify the amount of the premium due, the due date and where it is to be paid and be sent no less than 15 days and no more than 45 days prior to the due date.
Most insurers, however, have established a custom and practice of sending premium notices to their policy owners even in those states that do not require this.
To avoid lapses, insurance companies will accept a late payment of renewal premiums for a certain number of days after the premium is due. This is known as a grace period. Such a period is generally required by the state insurance codes and included in most insurance contracts. How the grace period works is as follows:
1. Grace period of 31 days for you to pay each premium after the first. Insurance will continue during the period.
2.If the policy renewal premium is not paid by the end of the grace period, your policy lapses and is no longer in full force as of the due date.
3. Payment of premiums during the grace period can usually be made at any time up until midnight of the 31st day of the grace period.
Many times the insurers will grant an additional period of time for payment after the grace period but check with your insurance company. Companies would rather grant a further extension than suffer from a policy lapse. But, most policies do not have this condition stated in your contract. Keep in mind that this is an individual’s decision and does not mean that companies will always grant extensions. Commonly, the extension is two weeks from the end of the grace period.
- Category: Articles Library, Company Profiles, Life Insurance
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