What Happens if I Miss Several Policy Payments?

No one buys a life insurance policy with the expectation of not being able to make the premium payments on that policy. After all, life insurance is so important you will not want to risk having your policy lapse. If you spent a significant amount of time shopping and speaking to insurance agents about the right coverage for the best price, then you obviously purchased your plan with the intent to pay.

When a Policy Cancels

A policy can lapse, or the coverage can be cancelled, after a late or missed payment so you would not have any reason to purchase coverage at a premium you could not reasonably afford. Some policy payments are due monthly and other quarterly or even annually. If you chose to purchase a plan that requires monthly payments, you understand that by not making your payment as agreed you could face having the coverage cancel.

If you are going to be paying annually, you need to be responsible for having the lump sum policy premium payment ready on the date it is due. The laws pertaining to lapses in coverage vary from one area to another, so it is important to read all your policy's information and understand it as soon as it goes into effect. You may be able to reinstate your policy shortly after a forgotten payment, as long as the premium is received by the insurance company within a certain period of time afterwards.

This is something you should be well aware of when first applying for your coverage and choosing a payment method. Some insurers may reinstate a cancelled policy after several missed payments, but at your credit's expense. This can make buying a new policy with another insurer much costlier in the future. If you do not have a good history of making timely policy payments most insurers will view you as a relatively poor risk and may either deny you coverage or grant you coverage but at a very high premium rate.

But, you may wonder what would happen if you unintentionally were forced to miss a few payments due to some financial circumstance such as a job loss. You will want to contact your insurer immediately after something like this occurs. Explain the situation to them and it might be possible to make temporary payment arrangements or at least obtain an extension of time to make a payment without suffering a loss of coverage.

By simply missing payments, even if you have a valid reason, you could jeopardize your valuable coverage. Plus, you could make it more difficult to renew the policy at the same rate. At the very least, a late or missed payment or two can result in higher policy premiums with the company you are covered by currently. It may not be possible to find a lower or more affordable rate with another company as your credit would be affected adversely as mentioned previously.

The best thing is to prepare for paying for an affordable plan that you are sure you can manage under any financial circumstance. Even if you face a financial challenge, it may not be wise to allow a life insurance policy premium to go unpaid. This is because anything can happen and you will always want to have your policy in effect just in case. If, despite all your best efforts you discover there will be a difficulty and you may miss several policy payments, be sure to contact your insurer as soon as you can. It might be possible to make temporary arrangements.

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