What happens if I don’t pay my term 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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UPDATED: Jun 29, 2022
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- 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.
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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.
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|
Get Your Rates Quote Now
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.
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.
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