Will I lose my life insurance coverage if I miss a payment?
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Asked February 20, 2013
Missing a single life insurance premium is probably not going to cancel your life insurance. You should make up the missed payment immediately, and missing multiple payments could spell bad news for your policy, but missing a single payment is usually not a catastrophe.
Contact your insurance company as soon as you realize that you have missed a premium. Most companies allow a grace period of 30 days in which you can make up the missed payment without any penalty. After 30 days, you may have to pay a reinstatement penalty, provide a new medical examination, or even lose the policy completely.
Another way to avoid losing your life insurance if you miss a premium is to set up the policy with automatic payments made directly from your bank account. This would mean you never missed a premium, but you would have to make sure to deduct the amount each month or you could be confused about your monthly bank balance.
After the policy has been in force for a while, it will have built a certain amount of cash value. Many insurance companies will set up the policy so that late or missed payments are automatically deducted from this face value, which effectively means the policy keeps itself paid up even when you can't afford to pay a premium.
You can also purchase a waiver of premium rider for your life insurance rider. If your policy has one of these, then it cannot be canceled if you miss premiums as a result of unemployment or disability. This is probably the best way to protect your life insurance against missed premiums, but it will not help you if you simply forget to send the premium in.
Answered February 20, 2013 by Anonymous