What Happens If I Stop Paying Premiums On My Life Insurance Policy?

Many people have life insurance as a form of protection. It can be used to pay for a funeral, medical expenses, and debts associated with a loved one’s death.

To keep your life insurance in force, you need to make your payments in a timely manner. Payments may be made monthly, quarterly, semi-annually, or annually, depending on the options your insurance company offers. If you miss a payment, your life insurance may lapse. This means it will no longer be in effect, and if you die during this time, your beneficiaries will receive nothing.

Here is a more detailed look at what happens if you stop paying the premiums on your life insurance policy.

Term Life Insurance vs. Whole Life and Universal Life Insurance

The type of life insurance you have can determine what happens if you miss a payment. With term life insurance, missing premium payments typically leads to a lapse in coverage after a short grace period, usually around 30 days. If payment is not made within that window, the policy terminates, and your beneficiaries receive no payout if you pass away after the lapse. Reinstating a lapsed term policy may require proof of insurability and payment of back premiums.

Permanent life insurance policies, such as whole life and universal life, often include a cash value component. If you stop paying premiums, the insurer may automatically deduct unpaid amounts from your accumulated cash value. This can keep the policy in force for a period of time. However, once the cash value is depleted, the policy will lapse unless payments resume.

Group Life Insurance

If you have group life insurance through your employer, they may cover a portion or all of your payments. If you do have to pay, it is usually deducted automatically from your paycheck. This coverage is typically a term life policy that lasts as long as you stay with your employer.

What Happens After a Lapse?

If your policy does lapse, all is not lost. However, if you want coverage, you need to act quickly. Many insurers allow you to reinstate your policy, but you will likely have to reapply and go through the underwriting process again. This means your premiums could be higher. If your health has worsened, there is also the possibility that your coverage could be denied.

Keep in mind that once your policy lapses, you will not have coverage until your account is reinstated or you open a new policy. This means that if you pass away during this period, your beneficiaries receive nothing.

Contact Us Today

Life insurance is a good option to pay for death-related expenses, but the premiums need to be paid in a timely manner. If you forget or cannot afford it, you will usually get a grace period before your coverage lapses.

Hartman Insurance Agency, Inc. offers permanent and term life insurance for Michigan residents. Which should you choose? Let us find you the right policy for your needs. Schedule a consultation today to learn more. Contact us via (734) 999-4190 or online here.