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    Home»Business»What Happens If You Miss the Payment of Life Insurance Premium?
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    What Happens If You Miss the Payment of Life Insurance Premium?

    AlexBy AlexAugust 4, 2021Updated:December 25, 2021No Comments6 Mins Read
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    When you purchase an insurance policy, you’re liable to make regular premium payments to keep the policy active. These consistent payments are added to the corpus that will be utilized to offer death benefits to your loved ones in the event of your unfortunate demise.

    However, unlike health or vehicle insurance, people usually don’t pay much attention to life insurance plans and tend to miss premium payments unknowingly. The financial aspects of an insurance policy are concerning for everyone looking to zero in a policy.

    This article provides you information on life insurance premium payments and explains what’s likely to happen if you anyhow fail to pay the required premiums. Additionally, you’ll also get to know about some great life insurance plans available in the market.

    How Often Do You Need to Make Premium Payments?

    As with any other policy, you have to pay premiums regularly towards your policy. The frequency of the payments as well as the cost involved depends majorly on your coverage preferences and the type of policy you choose.

    On a standard note, you can find various insurance providers with multiple premium payment terms such as:

    ● Annually – Once every year
    ● Semi-Annually – Twice every year
    ● Quarterly – Four times a year
    ● Monthly – Twelve times a year

    Several insurance companies allow you to enjoy flexible premium payment terms as per your financial preferences. Therefore, make sure you research well before shortlist a particular insurer for your coverage needs.

    How To Avoid Missing Life Insurance Premiums?

    Although paying the premiums is a necessary duty, which you must remember anyhow to make sure your policy stays functional, you can still make some necessary tweaks in your policy to make this task effortless such as:

    1. Configuring an Electronic Funds Transfer

    With the help of your bank, you can automate the payment process such that the premium rates are deducted automatically from your account, without needing for you to remember paying them on scheduled dates.

    2. Paying Your Premiums Annually

    When you choose to make annual premium payments, you just need to pay a single premium throughout the year. This is certainly easier than taking the time out to pay premiums every month on a fixed date.

    What Happens When You Miss Life Insurance Premium Payment?

    The consequences that you’ll likely face because of missing the premium payments depend majorly on your policy preferences. The type of life insurance you own determines what happens if you miss a life insurance premium payment:

    1. Term Life Insurance

    When you miss the premium payment deadline in a term life insurance, the account transitions into a grace period that allows you to reactivate your account by paying the missing premium. However, if you fail to pay the remaining premium during the grace period, your policy will collapse.

    2. Permanent Life Insurance

    Comprehensive life insurance often contains a cash value that tends to grow over time. With that said, if you miss any premium payment but the policy holds a great cash value, it will be used to cover the missed payment and keep the policy active.

    On the other hand, if the cash value of your policy is not sufficient enough to cover a missed premium payment, the policy is very likely to collapse. Keep in mind that in this case, you won’t be able to gain any benefits associated with the policy.

    The contract of your life insurance policy contains every major and minor detail about the premium payment due dates and the aftereffects of not paying them on time. Therefore, make sure you take out some time to read the policy documentation.

    What’s The Grace Period of a Life Insurance Policy?

    The grace period is a timeframe given by the insurance provider to help you cover up any missing premium payments. While most of the insurance providers offer a grace period of thirty days, it also depends majorly on the provider and type of policy you choose.

    That’s why it is necessary to cross-verify all the documents related to the policy. Additionally, you can also enquire the customer service department of your preferred insurance company to know about the grace period offered in your policy.

    Can You Reinstate a Lapsed Life Insurance Policy?

    Every insurance company provides different policies with varying terms. So, in case you pass the grace period without paying the due premiums, you need to consult your insurance providers to find out whether it’s possible to reinstate your insurance policy or not.

    Some providers will make the process as simple as filling an application and paying the due premiums since the date your policy lapsed. However, some companies may even ask you to undergo a medical examination to make sure that your health hasn’t changed since the lapse.

    Top Insurance Plans Available in India

    1. Canara HSBC Oriental Bank of Commerce – iSelect Star Term Plan

    Offering an unparalleled variety of options, this term insurance policy provided by Canara HSBC Oriental Bank of Commerce is one of the most prominent investment options available in India. It allows you to enjoy coverage for your whole life with the ability to cover your spouse under the same policy.

    2. Kotak Life Insurance Preferred e-Term Plan

    The Preferred e-Term plan by Kotak Life insurance is one of the cheapest life insurance plans available with lots of exciting features. The plan offers a recurring pay-out option that provides a fixed monthly or annual income to your family and dependents in the event of your unfortunate demise.

    3. Aegon Religare i-Term Plan

    If you’re looking for a policy with affordable life insurance premiums, this term plan by Aegon Life is certainly a perfect match for you. It features an in-built terminal illness cover that provides you 25% of the base amount for the diagnosis of any kind of terminal illness. Technically, sr22 insurance kansas isn’t really an actual type of insurance.

    Final Words

    When you miss a premium payment, you have the liberty to ask for reinstations of your policy. However, there’s a limited time up to which you can regain access to your policy. That’s why it is crucial to familiarize yourself with the concepts stated above. To prevent missing premium payments, you can also use a life insurance premium calculator and know how much you need to pay.

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