The policyowner’s payment of the premium is a “condition precedent” to the insurer’s duty to pay a death claim. So nonpayment of premiums will cause a life insurance policy to lapse. Even an insured in a coma or a person legally adjudicated mentally incompetent must pay premiums in a timely manner or the coverage will end. The insured’s rights under the contract end if the specified premium is not paid at the dates specified in the contract.
Most states’ laws require that the contract of life insurance contain a grace period provision. A grace period gives the policyowner an additional period of time after the due date of the premium during which the policy remains in full force. So if the insured dies during that period of grace, (typically thirty-one days from the due date) the insurer will pay the full death benefit (less the premium that should have been paid but was not). If the premium is not paid by the last day of the grace period and the insured is still alive, the policy owner does not owe the insurer for the unpaid premium, but of course, the policy lapses.
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM