Never Lapse Your Life Insurance Policy: A “How To” Guide

Missing a payment on your life insurance policy can cause quite a headache, if not resolved in a timely manner.

Once your policy is activated, otherwise known as “inforce”, than all the rights and privileges are valid starting on your issue date.

Most all insurers will allow four modes of payments in which your premiums can be paid; monthly, quarterly, semi-annually, and annually.   If a payment is missed for any reason the insurance company will send out mail notification to inform you of your missed payment before your policy lapses.  State law requires all life Insurance companies to grant an insured a 31 day grace period in which a payment can be made to bring the policy back in to good standing.  If for some reason the payment is missed for more than 31 days, the policy will lapse.

So what happens if your policy lapses? 

Once a policy lapse’s the insured has the option to go through reinstatement.

The reinstatement process requires a form known as the good health statement in which the insurance company will ask the current status of your health.  If your health is the same as it was when you initially applied, you will need to pay back the company all the missed payments so the policy can be put back in good standing.  (It should be noted that every company differs on time allowed for reinstatement payments after a lapse.)

On the other hand, if there have been any changes in your medical records since the policy was first activated, the insurance company may require the client to take a new physical exam and rates may increase as well.  In such a case, it’s always beneficial to speak with your licensed agent to see if it makes sense to re-apply in hopes that you will qualify for lower rates.  If you choose to shop around, at this time you can reevaluate your current needs to your policy’s coverage.  Your personal life may have also changed (new mortgage, birth of a child, income, new debts, etc.), so the amount and term length of your policy may not fit your lifestyle.

With all this being said, remember It’s important to not miss any payments.   If you move, make sure to update files with your new address.  If you change bank accounts, let your agent know so they can have your information updated.  The ever-evolving life is the primary reason why JRC insurance agents follow up with clients once a year to help keep policies inforce!

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