A life insurance premium is a payment made to the life insurance company to pay for coverage provided by a life insurance policy.
The premium can also contribute to growing the cash value inside a permanent life insurance plan.
You can pay the insurance premiums at your convenience by selecting the payment option that fits your situation.
Regular Premium Payments - You can pay premium regularly throughout the policy term either – monthly, quarterly, semi-annually or annually. When you buy a policy, you select the premium payment option.
Limited Premium Payments – You can choose to pay the premiums for a limited amount of time. In this option, you do not pay till the end of the policy term, but for a fixed number of years, for example, 10 years, 15 years, 20 years, 25 years, etc.
Single Premium Payment – You can also choose to pay the premium for the entire duration of the plan as a lumpsum in one single go, if the insurance carrier offers this option for the type of life insurance policy you need.
Should I Pay My Premiums Annually or Monthly?
You can save money by choosing to pay your policy premiums annually – once per year.
The frequency in which you pay premiums for life insurance is called your mode of premium.
Life insurance premiums can be paid annually, semi-annually, quarterly, or monthly. The most common premium payment mode is monthly.
What Happens If I Miss a Premium Payment?
What Happens If You Miss a Life Insurance Payment?
What happens if you miss your life insurance payment depends on the Type of Life Insurance you have:
Term life insurance: If you miss a premium payment on a term policy, the grace period to bring your account back into good standing begins — after which period of time the life insurance coverage will lapse.
Permanent life insurance: These types of insurance, like whole life insurance, often have a cash value that may grow inside your policy over time. If you stop making your policy premium payments but your policy has built up enough cash value, it could be used to pay your insurance premiums to keep the policy In Force. If the cash value amount is not large enough to provide a benefit for your whole life, your policy will officially lapse, and your life insurance death benefit will end when premiums are not paid when due.
It’s a good idea to read through the section of your life insurance policy that explains when your premium is due and what happens when premiums are not paid on time. When your policy is delivered, take time to read the entire life insurance contract to understand how your coverage works, and all terms, conditions and exclusions to your insurance policy.
What is the Grace Period on a Life Insurance Policy?
The grace period of a life insurance policy is the period of time you have to make a premium payment after the due date, and bring your insurance policy back to good standing.
The Grace Period is usually 30 days for life insurance premium payments; however, it depends on your policy and the insurance company.
Make sure to review your policy, or ask your insurance agent or insurance company, if you’re unsure of your policy’s grace period.
Can You Reinstate a Lapsed Life Insurance Policy?
Insurance Carriers have differing policies regarding reinstatement of life insurance coverage.
If your grace period has expired, review your insurance contract and call to find out whether your life insurance policy can be reinstated, and at what cost.
The insurer may require you to fill out a reinstatement application and pay the difference in premium since your life insurance policy lapsed.
Or, you may have to undergo a health examination to confirm the status of your health has not changed since you purchased your insurance policy.
Review: You can ask your insurer to reinstate a life insurance policy when you’ve missed a payment. However, the ability to reinstate your coverage is usually subject to a time limit. Life insurance companies are usually willing to work with you to catch up on your overdue premium payments and bring your policy back into good standing.
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