Life insurance is a contract. Term life insurance is a contract based on the exchange of premiums for coverage. If you stop paying premiums and you’re past the reinstatement period, you’ve lost coverage and may be required to re-qualify for coverage.
Permanent forms of life insurance with accumulated cash values may be able to sustain the policy without premiums for a time. To determine if your policy will continue without payments, order an in force ledger from your company. In your request for an in force ledger, ask them to illustrate the nonpayment of premiums under current policy expenses. This will give you an idea how long the policy will stay in force.
Agent, Rural Mutual Insurance Co., Union Grove, WI
That depends on the policy type. In most cases though the policy will be cancelled. Some policy's like universal life and some whole life policies may allow you to miss a payment without cancellations. If you just missed your payment date by a few days and it is the first time that you have missed a payment. I would contact your agent to see if the policy could be re-instated. Please remember every policy is different. Read your policy completely to know what coverage you have and what exclusions there may be or contact your local agent to have them go over the policy with you.
With Term life insurance, if you stop paying premiums for over one month, the policy will lapse. To get that same policy back you have to fill out a reinstatement application saying that your health has not changed, and you have to pay back premiums to when you quit paying them. If your health has changed or you are unable/unwilling to pay that amount, you will need to apply for a new policy. There is no cash value and no surrender charge.
When you stop paying the premium for cash value product such as Whole life or Universal life, the cash in the policy may pay the premiums until the cash value runs out. If you would rather take the cash value out in cash, or roll it over into another policy, or change your policy to a reduced paid up policy, you must contact your agent or the life insurance company and give them those instructions.
The answer is as simple or complicated as the policy you have.
With a simple term policy, it will lapse, after entering into your grace period.
Term with Return of Premium, generally will not lapse until the cash value the ROP has been exhausted.
Many clients will use a return of premium term to "pay up" their policy so they do not have to pay for all the years.
With Whole Life or UL the cash value in the policy will pay the premiums until exhausted.
Whole Life may provide you with a 'paid up' option however so if you do have to stop paying premiums, you can still get a death benefit although it will be smaller than whet your initial death benefit was.
Regional Marketing Director, Capital Choice Financial Group,
In most cases if you stop paying for life insurance the policy will lapse after the grace period. Some policies when premiums cease to be paid have an automatic loan provision that will pull cash values out of the policy to pay premiums until they are depleted. Others have been paid up by paying more premiums in the early years so there is no effect on the policy's status in this case.
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Permanent forms of life insurance with accumulated cash values may be able to sustain the policy without premiums for a time. To determine if your policy will continue without payments, order an in force ledger from your company. In your request for an in force ledger, ask them to illustrate the nonpayment of premiums under current policy expenses. This will give you an idea how long the policy will stay in force.
When you stop paying the premium for cash value product such as Whole life or Universal life, the cash in the policy may pay the premiums until the cash value runs out. If you would rather take the cash value out in cash, or roll it over into another policy, or change your policy to a reduced paid up policy, you must contact your agent or the life insurance company and give them those instructions.
With a simple term policy, it will lapse, after entering into your grace period.
Term with Return of Premium, generally will not lapse until the cash value the ROP has been exhausted.
Many clients will use a return of premium term to "pay up" their policy so they do not have to pay for all the years.
With Whole Life or UL the cash value in the policy will pay the premiums until exhausted.
Whole Life may provide you with a 'paid up' option however so if you do have to stop paying premiums, you can still get a death benefit although it will be smaller than whet your initial death benefit was.