Principal, LifeNet Insurance Solutions, Redmond, WA
When life insurance premiums have not been paid in a timely manner, a lapse occurs. Generally there is a period of time, perhaps 30 days in which the owner has the ability to pay back premiums to bring the policy current. If death of the insured occurs during this period a premium is simply deducted prior to paying the death benefit. After 30 days the policy in no longer in force but may be reinstated with a statement of good health from the insured. After that, a new application and underwriting will need to be completed.
President, Lane Independent Agency, Southern California
Depends on your policy. If you have Term coverage and you do not pay your premium, it generally will end forever, with usually a 30 day grace period to pay. With Permanent coverage, like either whole life or universal, you may get your premium paid from your equity in the policy, until that is exhausted, but at that time it will truly lapse also. This means that you no longer will have any coverage at all. Depending on what loans you may have taken out, you may have some cash value left that was not yet applied to the premium, but if you get that back, it will be taxable. Best to try to keep up at least minimum payments, meaning do not get more insurance than you can truly afford. Something is always better than nothing in your insurance coverage! Thank you. GARY LANE.
When life insurance lapses, the coverage ends. If the insured person would pass away after the policy lapses, there would be no death benefit paid to the beneficiary.
There is a 30 day grace period after the premium is due, where you can pay the premium and keep the policy from lapsing. Once it is lapsed, it must be reinstated or you need to apply for a new policy.
To avoid your policy from lapsing, be sure to keep your life insurance company apprised of any change in address (if your statements are mailed to you) or change of banks (if your premium is paid by automatic withdrawal).
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There is a 30 day grace period after the premium is due, where you can pay the premium and keep the policy from lapsing. Once it is lapsed, it must be reinstated or you need to apply for a new policy.
To avoid your policy from lapsing, be sure to keep your life insurance company apprised of any change in address (if your statements are mailed to you) or change of banks (if your premium is paid by automatic withdrawal).