What is the Premium Due Date?

When you purchase life insurance the insurer is covering you in exchange for premium payments. Premiums can be due at a fixed time or you may have a policy with flexible premiums. Your premium renewal date is clearly explained in your policy paperwork. When you have a basic term life insurance policy you will have fixed premium payments that are generally due monthly or quarterly. Now, of course there are more complicated policies and more complex premium structures to consider.

Like any other service we purchase in life, life insurance must be paid over time. Premium payments are your guarantee that no matter what your personal circumstances, your life insurance policy stays active. As long as you make your payments on or before your premium due date, the insurance company must honor your agreement and keep your policy active for the specified period of time.

Flexible Premiums

If you have a whole life or universal with a flexible premium arrangement you might be in charge of when your premiums are due. In these policies there are cash value levels that must be kept at certain levels. If the levels are adequate or higher due to higher than expected investment returns within the policy, that overage can be used to reduce or eliminate premium payments for a time. If your cash value is not adequate, you will have to put in money to bring the value back up to required levels. You will get notices with plenty of information to arrange your premium payments but you are ultimately responsible for understanding your policy, premiums, and keeping your policy active.

If you have a simple, affordable term life policy you will likely have a premium due date that is set quarterly or monthly. You can usually set up a direct payment out of your bank account. Those premium payments will remain the same throughout the life of the policy. The only time you would see a change is if you accept a renewal of the policy that increases your premiums. In this case you would be told your new premium due date and the amount due. Be sure to keep copies of all the paperwork.

The Grace Period

Most insurance providers offer a grace period before your policy will be cancelled due to non payment of premiums. Even if you have passed your premium due date you might still be able to keep your policy active. Contact your insurance company and ask if you are within the grace period. If you have passed the grace period you might be able to pay up the premiums, a penalty, and reactivate your policy. If you are having difficulty keeping up with your premium payments, communicate that to your insurance company right away. It is better to keep in contact than avoid the topic and lose your coverage.

Premium due dates are dependent on the type of policy you have and the premium structure in place to pay for it. There should be no surprises for the consumer in this arrangement. If you are unclear on when your premium due date is or how much your premium payment is, contact your insurance company immediately. Either Customer Service or your agent can research your policy and give you that information. The beauty of term life insurance is that no matter what happens in your life as long as you pay the premiums required they cannot alter or change your coverage from the original agreed upon contract. Very few things in life offer us a deal as simple as that.

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