You have an existing policy and times are hard or you simply forgot to make a payment to your life insurance company. Now, you’re wondering what will happen to your policy and what are some things you can do to prevent the policy from lapsing. You may also already got a policy that lapsed and would like to know all your options. The good news is that there are some things you can do and here at InsureChance, we have helped people reinstate their policies or simply help them get new ones. In this article, we will cover all the things that can happen when you miss your payment and what you can do about it.
Behold the almighty Payment Grace Period
Regardless if you simply couldn’t afford life insurance that particular month or you had more interesting things to do so you forgot to mail the company a check, a missed payment initially is no big deal. The reason is that there is a 30-day grace period that comes with all life insurance policies. This means that if you did miss a payment you can still make one within this time frame and your policy will still be active. As you can see there is nothing to worry about if you haven’t gone over a month mark.
-Important: You are still covered during the grace period. If you pass away, the company will still pay your beneficiaries the death benefit.
If your policy’s premiums are too expensive
In the event that you missed a payment or multiple payments because your policy is too costly or became unaffordable due to income change, there can be some room for adjustments. One way to reduce your existing policy premium is to call the insurance company and ask them to put you with a lower face amount. For example, you had a $500k 20 year term with $60/mo premium and now you reduced it to $250k 20 year term and your new premiums are $30/mo. When changing the face amount you don’t have to prove insurability and there are no questions but if you decide to increase it back in the future prepare for the new qualification. If you have a longer length of coverage you can adjust the length as well to reduce the premium.
What if my policy lapsed?
If you really missed the grace period your policy will lapse after the 30-day mark. This is not as ideal as simply making your payment within the 30 days because your policy will need more steps to be reinstated. It can happen to anyone and there are things you can do but like mentioned before you need to get a lot more done to bring your policy back to active status.
You can reinstate your lapsed policy!
Even if a policy lapsed for a few months or sometimes few years you may still be able to get it reinstated. The way to get this done is to contact the carrier and ask them to send you the reinstatement paperwork. Most companies have different policies but from our experience, you should be able to reinstate up to 5 years back. Once, you receive the reinstatement you will need to complete it and essentially it is same as the original life insurance application that you have completed.
Life insurance companies ask a lot of the similar questions and want to make sure that you’re still in the same health status as you were during the initial approval. They may also ask you to complete a medical examination if you went with a medical exam plan. In the event that your health has worsened or you became a smoker or had any other changes, the company can rate you up and in some cases decline to reinstate you. Now you may be wondering why would someone go for reinstatement rather than applying for a new policy? Well, because if you’re able to reinstate the policy you’ll be getting the same rate which you acquired either when the company was more competitive or when you were younger. So in a nutshell, due to premium savings.
Consider Automatic Payments
Most individuals when applying for life insurance tend to want an option where they need to send a check in but this is actually the main reason policies lapse. As an experienced life insurance agency, we highly recommend selecting an Automatic Premium Payment setup where your premiums get drafted automatically from your account or in some cases credit card. You have few options when it comes to auto payments like monthly, quarterly, semi-annually and annually.
Lapsed policy and now Shopping for life insurance?
In some cases, many individuals simply move on when their policy lapses for few reasons. One they don’t think it can be reinstated and for two when your policy gets reinstated you have to pay back all the premium payments you missed, which can add up to be quite a lot. So if you’re ready to look for a new life insurance policy then you are on the right site. We actually have a quote comparison tool for both term life and permanent life insurance where you can see which companies are offering the best rates. The two type of plans are the term and permanent and the difference is how long they will cover you for. Term life insurance is good for a certain period of time ranging from 1 year to 30 years with extremely affordable premiums. Permanent on other hand is designed to provide a lifetime cover until age 100 or 121 with some cash value accumulation.
I’m ready to buy life insurance again, what do I do now?
You simply need to work with an independent agency like ours that can shop around on your behalf via email or phone. If you need a plan fast because yours lapsed we have some companies that will let you get a plan within 15 minutes. This is accomplished by going with a no medical exam policy and you can get up to $500,000 of life insurance coverage immediately.
Work with us!
If you came to our site after finding out that your policy is no longer active and you’re worried about protecting your family. Don’t sweat it as we are here to help you out. Our agents will provide a service like no other! Every time a client reaches out to us we complete a needs analysis to see how much and for how long they will need life insurance coverage. This ensures that you’re not under or over insured with life insurance. After we determine the need we will check rates with all our companies based on your overall health and lifestyle. We will also help you complete the entire application and help you get it e-signed via email. Once we get the application complete will also attach a cover letter on top to ensure that the company sees you in the best light. With all these steps it is pretty obvious that you’ll get approved next and we will also provide you with a lifetime support. Don’t wait and call us today for a no-obligation quote!
