Life insurance providers require premium payments to keep your policy active. If you miss a payment, your policy could lapse, which means you lose your coverage. Here’s what happens if you stop paying term life insurance.
|Policy type||Action if premium payments are missed|
|Term life insurance||Coverage will lapse if you miss a payment.|
|Permanent life insurance||You may have the option to cash out the policy, agree to a reduced death benefit, or convert to term coverage if you stop paying premiums. Some providers offer a non-forfeiture option that allows you to stop paying altogether, but you have to agree to a smaller death benefit in exchange.|
To avoid missing payments, consider enrolling in autopay through your insurance provider or using a bill payment service from your financial institution. If you’re already behind on payments, reach out to your provider and ask about payment options to get back on track. If your policy lapses, work with your provider to create a plan to get your coverage reinstated right away.
Missing a life insurance premium payment is not the end of the world, but it’s important to take steps to prevent it from happening. Make sure premium payments are factored into your budget and consider setting up an automatic transfer to another savings account to prepare for large annual or semi-annual payments. And if you do miss a payment, work with your provider to create a plan to get current and avoid losing your coverage.
- Policygenius. What Happens If I Stop Paying My Life Insurance Premiums?
- Dundas Life. What Happens At The End Of Your Term Life Insurance Policy?
- LifeInsure. Can You Cancel Life Insurance? (And What Happens If You Do)
- Investopedia. What Happens If You Outlive Your Life Insurance
- briansoinsurance. What Happens If You Stop Paying Life Insurance Premiums?