Five Actions To Take If You Let Your Life Insurance Lapse

If insurance premiums have not been paid for quite a long time, the policy will lapse and will consequently cease its effectivity. If the policy in concern is a whole life insurance policy or any cash value policy, then the amount that has accumulated can be used for paying the premiums until such time that all of the cash value has been used up. If you are the beneficiary of a life insurance policy, you may want to continue paying for it. Otherwise, your future’s security would have to depend on the policy owner. Fortunately, there are some things that can be done to get one’s life insurance back.

Letting Your Life Insurance Lapse Can Put You In A Bad Light

There are insurance companies that carefully keep track and take note of their existing policy holders who have let their life insurance lapse. A lot of these insurance companies are not too lenient about this, making it difficult for such policy holders to get additional life insurance. This translates to double trouble for you and your beneficiaries; aside from no longer being able to receive life insurance benefits, there is also a great possibility that a new insurance policy will not be issued to you. There are also insurance companies that make certain arrangements, like making those whose life insurance lapsed pay the premiums annually instead of on a monthly basis.

Check If The Lapse Is Within The Grace Period

Luckily, you discovered soon enough that your life insurance policy lapsed. In a case like this, contact your agent or insurance company and check if you have a grace period and if the lapse still falls within it. Usually, the grace period offered by insurance companies is quite short, normally around 30 days. If the lapse is already beyond the grace period, you have to look into other ways of possibly getting back your life insurance.

Find Out How Much The Cash Value Is Worth

If you have a permanent life insurance or a policy with cash value, check how much has built up over the years and ask your insurance company it that amount can make up for the premium payments of the missed months. Be reminded however that term life insurance does not provide cash value and once you miss a payment, your life insurance lapses.

If Qualified, Apply For A Policy Reinstatement

You can apply for a policy reinstatement if you found that your life insurance has lapsed. This is a possible option only if the lapse is very recent. If qualified for a reinstatement, you may have to go through some questionnaires upon application. Once your policy has been reinstated, you should be able to regularly and consistently pay your monthly insurance premiums.

Consider A Waiver Of Premium Rider

Insurance riders may be an attractive feature, and actually beneficial in a number of ways, but some are just not worth the extra amount you pay for premiums. However one way that you can be protected from a lapse is by including a waiver of premium rider in your life insurance policy. Under this provision, the premiums will be waived should you become disabled before reaching a specific age.

Get A New Life Insurance Policy

If your insurance company denies your application for a reinstatement, you’re left with no other option but to get yourself a new policy. Try to find policies with more affordable premiums. You can ask a quote from different insurance companies to make sure you have all the options available, and choose one that is most reasonable for your needs and your budget.

In cases when your life insurance has lapsed, don’t delay calling your life insurance company; there might still be hope of getting back your policy. Although most insurance companies are careful in dealing with policy holders with a lapsed life insurance, each one has varying ways of handling these situations. They could give considerations especially if the reason for the lapse is justifiable enough. Your insurance company could map out a way for your policy to be restored.

Flickr Photo Credit: Steve Wampler Photography