Life insurance grace periods

Life insurance is an agreement with your insurance company: You make regular payments to them, and they pay your loved ones a specified amount if you die while the policy is active. But what happens if you don’t keep up with those payments?

Missed payments happen, which is why life insurance companies offer a grace period on payments. If you miss a life insurance payment, the grace period gives you a little time to get things back on track. Here’s what to know about grace periods.

What is a grace period in life insurance?

Most insurers offer a grace period between the time you miss a payment and the time your policy is cancelled. Since life insurance coverage protects against the unexpected, life insurance companies want to work with you so that one missed payment doesn’t put your family’s entire future at risk.

So how long is the grace period for an individual life insurance policy? The grace period varies by company and by state, but it’s typically at least 30 days.

What happens if you miss a life insurance premium payment?

When you buy life insurance, you choose a payment schedule for your premiums. Most people choose monthly life insurance premiums, but you can sometimes choose annual premiums or another schedule.

You then make regular payments according to the schedule you choose. If you miss a due date, the payment is considered late, and the grace period begins. Missed payments can happen for many reasons:

  • You forget to make the payment.
  • Your bank information changes and your insurer isn’t able to process the payment.
  • Factors beyond your control, like a medical emergency or natural disaster, prevent you from paying.
  • You don’t have the money to make the payment.
  • You decide the policy is no longer the right fit for you.

During the grace period, the life insurance company will often try to contact you to remind you to make up the payment. If you’re able to make up the missed payment during the grace period, you’ll typically need to pay a late fee as well.

Once you reach the end of the grace period, the insurer typically cancels the life insurance policy. After cancellation, many companies will give you the option to reinstate your policy with evidence of insurability. If you decide to reinstate your policy, you’ll generally need to make up any missed payments and interest that accrued during that time.

In some cases, it can be more cost-effective to reapply for a new policy. Your premiums will be higher, since they go up with age, but you won’t owe any back payments.

If you stopped making payments because your plan no longer fits your needs, give your insurance company a call. At Fidelity Life, our agents will complete a policy review with you to explore which policies you’re eligible for and find an alternative that may work better for you and your family. Our term life insurance calculator can also help you find an ideal coverage amount.

How to make insurance payments on time

Concerned about keeping up with your payments? Here are a few tips for making your insurance payments on time:

  • Sign up for electronic funds transfer (EFT). Ask your insurer if you can put your premium payments on autopay, especially if you pay them on a monthly basis. Many life insurance companies actually require that you sign up for EFT. This can make paying simpler than setting up a credit card payment, since bank information is less likely to change over time.
  • Schedule recurring credit card payments. Prefer to pay by card? Ask your life insurance company to set up autopay so you don’t have to remember to process payment each time. Just remember to update your insurer if you receive a new card.
  • Talk to your life insurance company. If you’re struggling to make your premium payments, reach out to your life insurance company. They’ll often try to help you find a solution if they can. Especially during the pandemic, some life insurance companies are being more flexible with payment schedules.
  • Ask your beneficiaries for help. If you can’t make your life insurance payments on your own, consider reaching out to your beneficiaries for financial assistance. Since the loss of your life insurance coverage affects them directly, it’s worth asking if they can help with the premium payments.

Still have questions about the grace period in life insurance?

We’re here to help. Fidelity Life offers a wide variety of products to support people at every stage of life. Get your quote online today or call one of our agents at (855) 291-6365.

At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible.