- What happens if I don’t pay a life insurance premium?
- December 13, 2013
As the economy continues to improve, observers of the life insurance industry have seen a general upswing in the number of people who are weighing this as an important investment to help protect their families.
However, tough economic times can also mean that more people are having a harder time keeping up with their life insurance premium – especially when factoring in other crucial financial needs like paying the mortgage and staying on top of monthly credit card bills.
With that in mind, the American Council of Life Insurers, an industry trade group, offers some guidelines on its website on how consumers should proceed if they miss a payment or have their policy lapse.
The organization notes that if a person does miss a payment, they typically have a 30-day grace period to try to catch up. A person who dies during that grace period will still receive their benefit, minus the sum of the overdue payment.
However, if a policy lapses for non-payment, the ACLI notes that it may still have financial value, depending on how long that policy was held. It may also be possible to reinstate the policy for up to five years after it lapses. If you decide not to reinstate the policy that has lapsed and cancel, you can still receive the cash value.
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