You didn’t pay your life insurance premium. Oops! You changed banks and forgot to update the insurance company or you forgot to send in the check or maybe you just didn’t have sufficient funds in your account. Whatever the case, most life policies have a grace period, typically around 30 days, which allows your policy to stay in force temporarily and gives you a little extra time if you need to make a late payment. You’ll need to resume payments before the end of the grace period to avoid ending your coverage.
During COVID, some insurers extended their grace periods to 60 or 90 days.
If you have a term policy and don’t make the payment within the grace period, the insurance company will usually end your policy after the grace period is up. If you have a permanent policy, but your policy has built up sufficient cash value, it can be used to cover the cost of your premiums to keep the policy active. If the cash value amount is not sufficient to provide a benefit for your whole life, your policy will officially lapse, and your life insurance benefit will end when premiums are not paid when due.
Your policy will tell you when your premium is due and what happens when premium is not paid on time. When you receive your policy, take time to read the contract and ask your agent what your specific rights will be.
What Happens If You’re Past the Grace Period? Can It Be Reinstated?
Review your insurance contract and call the company or agent to find out whether your policy can be reinstated.
Sometimes you just need to fill out a reinstatement application and pay the difference in premium since your policy lapsed. Other times, you may have to take a medical exam to ensure your health hasn’t dramatically changed since you purchased the policy.
The opportunity to reinstate is time sensitive, so find out how long you have in case your coverage ends when premiums are not paid.
The Bottom Line
If you didn’t pay your premiums on time and you’re past the grace period, call your insurance company and ask if you can reinstate it. Many insurance providers are more than willing to work with you to catch up on payments and bring your policy back into good standing. The best way to avoid a missed payment is to set up EFT to automate the process and be sure to update the insurance company if your bank account info changes.