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After taking out a life insurance policy, it is important for you to make certain to make your premium payments on time. Otherwise, you risk the possibility of having your policy lapse, which means your dependents will no longer receive a benefit if you should pass away.
At the same time, there may be certain situations that make paying your life insurance premiums difficult. Therefore, it is important for you to understand the ins and outs of the payment process in order to make certain your policy remains actively in place.
Making Your Payments
While the best course of action is to make certain you make your premium payments on time each month or quarter, most insurance companies will provide you with a 30 or 31 day grace period during which time you can make a payment and keep your policy active. In fact, if you should happen to pass away during this grace period, your beneficiary will still receive the death benefit. Of course, the missed premium payment will be taken out of the payment before it is issued.
If you don't make your payment by the time your grace period has ended, your policy will lapse. If you have a cash value policy, however, you may be able to arrange for the premium amount to be removed fro the cash value of the policy. This way, your policy will remain active and you will not lose out on the cash value that you have built.
Whether you have a term life insurance policy or a cash value policy, make certain to read your policy carefully in order to learn more about your grace period and how long it lasts.
Taking Action if Your Policy Lapses
If you fail to make your premium payment on time and if your grace period has already passed, you may be able to get the policy reinstated after it lapses. Whether or not you are able to reinstate the policy will depend upon the company as well as the type of policy you have purchased. In order to reinstate a policy, you will likely need to request a reinstatement within a certain timeframe. In addition, you will likely have to pay all of the overdue premiums as well as interest on the amount owed. If you took out any loans against the policy, you will also need to pay them off in order to get the policy reinstated and you will likely need to prove your insurability once more.
Obviously, it is best to simply pay your life insurance policy premiums on time. This way, you can avoid the hassle of paying extra fees and having to get your policy reinstated. If you have ran into financial troubles and are experiencing difficulty with paying your premiums, however, it is a good idea to be aware of your options so you can juggle your finances and get your bills paid as efficiently and effectively as possible.