If you stop paying life insurance premiums for Term life insurance, your policy will lapse after a one month grace period. There will be no penalty charged and you will receive no money back, unless you took out Return of Premium (ROP) Term insurance, in which you may be able to get some of your premiums back if you kept the policy long enough.
If you stop paying premiums on Whole Life or Universal Life, the cash value of the policy may continue to pay the premiums for a while. If you want to take the cash out, you need to notify the life insurance company or your agent that you are dropping your policy. And once that runs out, your policy will lapse (quit providing coverage).
That is a great question! When you stop making payments on your policy, it will enter into what is called a "grace period", and then will "lapse", or end. With a term policy, that is generally no big deal, you don't lose anything by letting that happen. Your whole life policy can be a whole different story. With the whole life policy, over time it builds a cash value, one that will be kept by the company, should you allow the policy to lapse and poof up in smoke. The better thing to do in the case of a whole life policy is to either "surrender" it (and get your cash back) or take it as "paid up insurance", have some coverage, and no more payments. Please feel free to contact me if you need help with this, okay? Thanks for asking!
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If you stop paying premiums on Whole Life or Universal Life, the cash value of the policy may continue to pay the premiums for a while. If you want to take the cash out, you need to notify the life insurance company or your agent that you are dropping your policy. And once that runs out, your policy will lapse (quit providing coverage).