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What Happens If a Life Insurance Policy Lapses?

What Happens If a Life Insurance Policy Lapses?

A lapse in a life insurance policy occurs when a premium isn’t paid.

There is a brief grace period (typically 30-31 days) in which a premium payment for a life insurance policy can still be made.¹ But if the payment is not made during the grace period, the life insurance policy will lapse. At this point, all benefits are lost.

There are circumstances in which the life insurance policy can be recovered. It could be as simple as resuming premium payments… or it could involve a lengthy process that includes a new medical exam, repaying all premium payments from the lapsed period, and possibly the services of an attorney.

The best practice to avoid a policy lapse is to make premium payments on time. To help out their customers, many insurance companies can automatically withdraw the monthly payment from a checking account, and some companies may take missed premium payments out of the policy’s cash value – but please note: term life insurance has no cash value. In this case, missed premium payments won’t have the cash value failsafe. If you’re in danger of a lapse, contact me today. Together we can review your financial strategy to help you and your loved ones stay covered.


Source: ¹“Life Insurance Lapse Lawyer.” Life Insurance Attorney, 2018, https://bit.ly/2MZR4LO.

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