Missing a life insurance payment can feel worrying, but most policies include protections to help you stay covered. Here’s what generally happens if you miss a premium payment:
1. Grace Period
Most life insurance companies offer a grace period—usually 30 days—after your due date. During this time, your coverage stays active even if you haven’t paid. You can make the missed payment without any penalties, and your family remains protected if something happens to you.
2. Policy Lapse
If you still haven’t paid by the end of the grace period, your policy may lapse. A lapsed policy means the insurer is no longer obligated to pay out a death benefit. For term life insurance, this simply ends your protection. For permanent policies (like whole or universal life), the insurer may use your policy’s accumulated cash value to cover the missed premium. If the cash value isn’t enough, the policy lapses.
3. Reinstatement Options
Many insurers will let you reinstate a lapsed policy within a certain window—often within a year of lapse—by paying all overdue premiums plus interest or fees. You may also need to prove you’re still in good health, which could include a new medical exam. If you qualify, your coverage starts again from the reinstatement date.
4. Impact on Benefits
During the grace period, your beneficiaries are protected. But after a lapse, there’s no death benefit until the policy is reinstated. In some cases, missing payments repeatedly can lead insurers to require higher premiums or more stringent underwriting when you ask to reinstate.
5. Tips to Avoid Lapses
- Set Up Automatic Payments: Linking premiums to your bank account or credit card can help you avoid missed payments.
- Watch Your Mail and Email: Insurers send reminders before due dates and grace period deadlines.
- Keep an Eye on Cash Value: If you have a permanent policy, monitor its cash value to ensure it can cover a missed premium if needed.
Conclusion
Missing one payment isn’t the end of your life insurance, thanks to the grace period and reinstatement options. Still, paying on time is the best way to protect your loved ones without interruption.