Economic difficulties can mean that people have 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.
An “insurance premium” is a sum of money an individual or business pays for an insurance policy. The insurance premium, considered income by the insurance company once it’s earned, represents a liability in that an insurer is required to provide coverage for claims being made against the policy.
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.
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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, but minus the sum of the overdue payment.
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.
Need answers to more life insurance questions? You can find the answers to all your life insurance questions here…