What happens if I don’t pay my life insurance premium?
We'll cover what happens when you don’t pay your term life insurance premium in a timely fashion. If your policy is canceled, there are a few ways you can get it reinstated.
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Brad Larson
Licensed Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Insurance Agent
UPDATED: Nov 27, 2023
It’s all about you. We want to help you make the right life insurance coverage choices.
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Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Nov 27, 2023
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- All term life insurance policies allow for some grace period in making your monthly premium payment
- The common length of a grace period is 30 days
- If you don’t pay before the end of the grace period, your life insurance company may cancel the policy
Term life insurance is an agreement between you and your life insurance company. Unlike whole life insurance, term life insurance is only provided for a certain period of time. Term lengths can range from five to thirty years from the start date of the policy, and expire at the end, or if you don’t pay your bill.
But what happens if you miss a life insurance payment or stop paying term life insurance premiums? Let’s find out.
Before jumping into the details of what happens if you don’t pay your term life insurance premium, use our free online tool for instant term life insurance quotes in your area. Learn more about how to cancel your life insurance policy.
Not yet ready to buy term life insurance? Read on to learn more.
What happens if you stop paying life insurance premiums?
All term life insurance policies allow for some grace period in making your monthly premium payment. There are different ways that you can pay for your term life insurance policy, and you get to choose how you’ll pay when you set it up. The common length of a grace period is 30 days.
Your policy won’t lapse as long as you make your payment within that 30-day window. But keep in mind that each insurance company has its own rules and guidelines about grace periods. That’s why it’s worth checking your policy thoroughly so you know exactly what to expect in any given circumstance.
After that 30-day period, your life insurance company has the right to cancel your term life policy. If you miss a term life insurance payment, make it as soon as you can to avoid policy cancellation.
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Can a canceled life insurance policy be reinstated?
If you happen to get past the grace period without paying your premium, the policy will likely lapse.
If you decide you still want coverage, you can apply for reinstatement, but make sure you read the terms and conditions to make sure this is allowed. Each insurance company can make its own rules regarding policy reinstatement. Accelerate the process of acquiring information on how to reinstate a lapsed insurance policy.
Most life insurance companies allow you to apply for reinstatement up to five years after the end of the grace period.
How do I reinstate my unpaid life insurance policy?
To reinstate the policy, here’s what you’ll need:
- Reinstatement Application. Some companies will ask you to complete this, which is pretty similar to your original application.
- Health Statement. Some companies might require that you submit a health statement about your current health status to see if anything has changed since your original application.
- New Paramedical Exam. Some term life insurance companies might require that you take a new medical exam, but this varies from company to company. Most companies don’t require this, however, if you apply within 90 days of the end of the grace period. Some give you up to a year before they require a new exam.
Oftentimes, you won’t need to provide these things, but some insurers will require them.
What if I decide I don’t need life insurance coverage anymore?
Maybe you bought a whole life insurance policy, or perhaps you purchased a less-expensive term insurance policy elsewhere. Perhaps you discovered that there was a difference between term life insurance and permanent life insurance, and you want to switch the type of policy you have. Regardless of your reasons, you have a couple of options for terminating the policy.
- Stop Paying. The simplest way to get rid of your term life insurance is to simply stop paying. The policy will cancel on its own due to non-payment.
- Formally Cancel. If you’d rather let the insurance company know, you can formally cancel your term life insurance policy by calling them and giving them a specific date. You can also ask them to refund any “unused” premiums you’ve already paid. Most companies will have no issues giving you your money back.
There are usually no strings attached to the policy when canceling, but the company may try to offer you benefits and/or discounts for outliving the policy.
Also remember, term life insurance rates increase the older you get and the more health risk you present.
Below are a few sample rates from the top three life insurance companies for insurance holders at different stages of life.
General Age of Insured | Company A & Sample Annual Rates | Company B & Sample Annual Rates | Company C & Sample Annual Rates |
---|---|---|---|
20s | Massachusetts Mutual Life Insurance Co.: $177.25 | State Farm Mutual Automobile Insurance: $195.50 | Pacific Life: $199.92 |
30s | Massachusetts Mutual Life Insurance Co.: $201.00 | Pacific Life: $215.12 | State Farm Mutual Automobile Insurance: $222.25 |
40s | Massachusetts Mutual Life Insurance Co.: $321.50 | State Farm Mutual Automobile Insurance: $339.75 | Pacific Life: $364.25 |
50s | State Farm Mutual Automobile Insurance: $604.50 | Massachusetts Mutual Life Insurance Co.: $646.00 | Pacific Life: $719.04 |
60s | Massachusetts Mutual Life Insurance Co.: $1317.25 | State Farm Mutual Automobile Insurance: $1469.25 | Pacific Life: $1604.12 |
Comparing rates from the top three companies for you will help you narrow down your options and choose the best life insurance policy for your needs.
Case Studies: What happens if you don’t pay your life insurance premium?
Case Study 1: John’s Missed Payment
John, a 40-year-old individual, had a term life insurance policy with XYZ Insurance Company. Due to financial difficulties, he missed his premium payment within the grace period of 30 days.
As a result, his policy was canceled by the insurance company. In this case, John faced the consequences of not paying his term life insurance premium on time.
Case Study 2: Sarah’s Policy Reinstatement
Sarah, a 35-year-old policyholder, missed her term life insurance premium payment and allowed her policy to lapse. Realizing the importance of life insurance coverage, she decided to reinstate her policy.
Sarah contacted her insurance company and followed their specific reinstatement process, which involved submitting updated information, completing an application, and paying the outstanding premiums along with applicable fees or interest.
After meeting the requirements, her life insurance policy was successfully reinstated.
Case Study 3: Mark’s Decision to Terminate Coverage
Mark, a 50-year-old individual, had a term life insurance policy for several years. However, he recently decided that he no longer needed life insurance coverage. Mark contacted his insurance company and expressed his intention to cancel the policy.
He terminated the policy without any complications or strings attached, as he had reached a point in life where he felt adequately protected.
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Bottom Line on Not Paying Your Term Life Insurance Premium
Thankfully, term life insurance policies are usually easy to reinstate if you fall behind, and — unlike whole life insurance — there aren’t as many complications if you don’t pay your premium on time.
If you find yourself falling behind on term life insurance payments or you’re unsure about whether you want to continue your coverage, contact your insurance agent or your life insurance company to discuss your options. They can help you make an informed decision in order to keep your loved ones protected.
If your individual life insurance policy has recently lapsed, consider shopping around for a new one that can protect you and your family.
Still need to make a decision about purchasing a term life insurance policy? Try our free online tool to get instant term life insurance quotes from insurers in your area.
Frequently Asked Questions
What happens if I don’t pay my life insurance premium?
If you fail to pay your life insurance premium in a timely manner, your policy may be canceled. However, there are usually options available to reinstate the policy. It’s important to contact your insurance agent or company as soon as possible to discuss your options and avoid a policy cancellation.
Can a canceled life insurance policy be reinstated?
In some cases, a canceled life insurance policy can be reinstated. Each insurance company has its own rules regarding policy reinstatement, so it’s crucial to review the terms and conditions of your specific policy. Generally, you can apply for reinstatement within a certain timeframe, usually up to five years after the end of the grace period.
How do I reinstate my unpaid life insurance policy?
To reinstate your unpaid life insurance policy, you will typically need to contact your insurance company or agent and follow their specific reinstatement process. The requirements may vary, but you may need to provide updated information, complete an application, and pay any outstanding premiums, along with any applicable fees or interest.
What if I decide I don’t need life insurance coverage anymore?
If you decide that you no longer need life insurance coverage, you have the option to terminate the policy. This can usually be done by contacting your insurance company or agent and expressing your intention to cancel the policy. Keep in mind that there may be certain benefits or discounts offered to policyholders who outlive their policies, so it’s worth discussing your decision with your insurance provider.
What are the consequences of not paying term life insurance premiums?
If you fail to pay your term life insurance premiums, your policy may lapse or be canceled. This means that you will no longer have the coverage provided by the policy. It’s important to make payments within the grace period specified by your insurance company to avoid a policy cancellation. If you’re unsure about your options or need assistance, reach out to your insurance agent or company for guidance.
Your life insurance quotes are always free.
Secured with SHA-256 Encryption
Brad Larson
Licensed Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.