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The Life Insurance Grace Period: Payments & Policy Lapse

July 07, 2023
Our goal is to educate and advise on life insurance options, so you can feel confident in making the right choice, whether that’s through Quotacy or somewhere else. To ensure we provide accurate and trustworthy information, our writers follow strict editorial standards.

For a life insurance policy to stay inforce (active), you need to make regular premium payments. But what if yours is late or you miss it altogether? Fortunately, every life insurance policy has a safety net known as the grace period provision.

The life insurance grace period is typically around 30 days. Let’s explore how grace periods work and what happens when you don’t pay your premium on time.

Table of Contents

Explore our life insurance blog to learn more about life insurance products, how to buy, what it’s like to own a policy, and other useful advice.

What Is the Life Insurance Grace Period?

Every life insurance policy has a grace period that usually lasts 30 days from the payment due date. Your coverage will continue as long as you make the payment and the insurance company processes it within that time frame.

In addition, even if you haven’t paid your due premium, you’re still insured during the grace period.


Your term life insurance policy’s monthly premium was due April 30th, but you changed banks and forgot to update your insurance company with the new account information.

You die in an accident on May 5th without ever sending in the due payment. Because your death occurred within the grace period, the insurance company still pays your beneficiaries the death benefit proceeds after deducting the owed premium amount.

What If You Miss the Grace Period?

If the grace period passes and you still haven’t paid your premium, coverage will lapse in most cases.

If your policy lapses, it’s no longer active. Losing coverage means two things:

  1. Should you pass away, your beneficiaries wouldn’t receive a death benefit.
  2. The insurer will not refund the premiums you paid in the past.

However, there are some cases in which your policy would not lapse if you miss a payment, depending on your insurance type and how it’s set up.

Missing Payments on Term vs Permanent Policies

Life insurance policies fall into one of two broad categories: term and permanent. How do missed payments work for each?

  • Term life insurance policies don’t accrue cash value and will lapse if the premium is overdue and the grace period expires.
  • Permanent life insurance accrues cash value over time. Many permanent policies have an automatic loan provision or something similar. With this provision, if a payment is missed, these policies automatically draw from the cash value to cover the premium, preventing the policy from lapsing.

What Happens If Your Policy Lapses?

Your policy will lapse if you don’t pay your premium by the due date, and your grace period expires. But, you may have the option to reinstate your policy.

Each company has guidelines for reinstatement, but most will allow you to apply up to five years from the end of the policy’s grace period.

You’ll need to fulfill the company’s specific requirements to reinstate the policy. These requirements may include:

  • Reinstatement application: All companies require you to complete a reinstatement application similar to the initial application you filled out for the policy.
  • Health statement: Most companies will want to assess if your health condition has changed since your initial application. However, if you apply for reinstatement within 30 days after the end of the grace period, many companies may waive this requirement and not require underwriting to reinstate the policy.
  • New medical exam: If your health statement indicates significant changes, you might be asked to undergo a new medical exam.
  • Pay outstanding premiums: Finally, if you’re approved for reinstatement, you’ll be required to pay all overdue premiums from the end of the grace period. If your policy lapsed several years ago, this could be significant.

In some cases, if several years have passed since the policy lapsed, applying for a new policy altogether may be a better choice than reinstatement.

h Note: Specific terms and requirements vary significantly between insurance companies and policy types. Not all insurers may offer the same grace period duration, reinstatement window, or requirements for health statements and medical exams.

Reinstatement vs Replacement

Reinstating a policy and replacing a policy are two different options for policy owners.

  • Policy reinstatement: reactivating a lapsed policy
  • Policy replacement: canceling an existing policy to start a new one

We’ve already explored the process of policy reinstatement.

Policy owners might choose replacement for several reasons, including:

  • Obtaining a better rate
  • Changing coverage amounts
  • Switching to a different type of policy

We always recommend waiting until your new policy is 100% in effect before canceling an existing policy to avoid gaps in coverage.

See what you’d pay for life insurance

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What If Your Premiums Are No Longer Affordable?

If you’re struggling to make your payments, there are a few options to consider:

  • Lower your coverage: Some policies allow you to reduce the face amount. Call your agent or insurance company about possibly reducing your death benefit, which could lower your premium.
  • Switch to a less expensive policy: If you have a permanent life insurance policy, you might consider switching to a term policy, which can be less expensive. Bear in mind that term policies do not build cash value and only provide coverage for a specified period.
  • Use the policy’s cash value: If you have a permanent policy that has built up cash value, you can use some cash to cover your premiums temporarily. Be cautious with this option, as it could reduce your death benefit.
  • Policy surrender: In extreme situations, you could consider surrendering your policy, meaning you cancel the policy and possibly receive the cash value. Be aware that this decision may have tax implications.
  • Life settlement: Sometimes, you can sell your life insurance policy to a third party for a lump sum. The third party would then take over the premium payments and receive the death benefit when you pass away.
  • Non-forfeiture options: Your policy may have non-forfeiture options that provide reduced paid-up insurance, extended term insurance, or cash surrender in instances of non-payment.

When shopping for life insurance, buy a policy you can afford long-term. Not all life insurance policies are adjustable, and you may be forced to forfeit your coverage if you can no longer afford it.

How to Avoid Policy Lapse

Life insurance is not for your benefit but for the financial security of your loved ones.

To ensure you don’t accidentally miss a payment and risk your policy lapsing, here are some tips:

  • Set up reminders for yourself to pay on time. These can be calendar alerts on your phone or handwritten notes on your home calendar.
  • Set up automatic payments. All major life insurance companies can automatically draft your premium payments from your checking account. Remember to update the details if you switch banks.
  • Designate a third party to receive payment alerts. You can choose a trusted person to receive late-payment notifications by completing a form from your insurance company. If you miss a payment, you and your designee will receive a late notice.

Learn what you need to know about a policyowner’s responsibilities beyond regular premium payments.

Contact a Quotacy Agent for Unbiased Life Insurance Advice

Grace periods are built-in safety nets to help preserve your coverage. But if you find yourself with a lapsed policy and need a new one, Quotacy can help.

Our quoting tool doesn’t require any contact information. You can get term life insurance quotes instantly.

As life changes, so do our life insurance needs. Contact us directly for a needs analysis, or use our free life insurance calculator.

Watch the Missed Life Insurance Policy Premium Payment Video


  1. David sharkey

    I have a 25 year instant life insurance with AIG if i outlive the policy will i hey back the premiums i have paid in.

    • Natasha Cornelius

      David, are you referring to AIG Direct? Only return of premium term life insurance policies return the premiums you’ve paid if you outlive the term. Check your policy details to see if you have a return of premium rider or contact your agent.

  2. Emma

    Hi, My husband died on Oct. 8, 2017. He had term life insurance and because he was totally disabled, the monthly premiums were waived. We didn’t find that out until several years after his total disability. We received a letter stating that since he was going to be turning 65 on Sept. 21, 2017, the premiums would be our responsibility. We could not afford the premium and canceled on Sept. 12, 2017. I have contacted them (UNUM) and they say that since we canceled, the grace period does not apply. Hoping that’s not true. Thanks for any advice.

    • Natasha Cornelius


      I’m sorry to hear about your husband. My heart goes out to you. Unfortunately after you surrender, or cancel, a life insurance policy, the grace period does not apply. A grace period is built in for families who miss premium payments and this grace period (usually about 30 days) allows them to catch up on payments without having to go through the underwriting process all over again. If you cancel the policy though, the insurance company officially closes out the policy.

      We wish you the best, Emma. Please contact us directly if we can help you further.

  3. Elizabeth Santos

    My husband had insurance with William Penn. He couldn’t afford the payments he was making and his policy lapsed. Is there any money we can get back from this since he was paying this policy almost 10 years. Do we lose everything??

    Thank you.

    • Natasha Cornelius

      Hi Elizabeth,

      Is this a term policy? When did your husband’s policy lapse? With William Penn, after a policy lapses they allow you 20 days to contact them to reinstate your policy without having to go through underwriting again. If it has been over 20 days but more recent than years passed, you may also be able to still reinstate the policy, but your husband would have to go through the underwriting steps again.

      If your husband chooses to reinstate the policy and the policy is paid up-to-date, he can opt to drop the coverage amount so the policy is more affordable. This way you don’t lose everything and he still will have coverage.

      If this is a term policy and you decide to let the policy lapse and not reinstate, the policy will be terminated and unfortunately you would not receive any money back.

  4. do

    Excellent article. I’m exрeriencing a few of theѕe iѕsues
    as well..

  5. Annette Morrison

    What If I can’t continue my payments on death cover as the payments increase yearly and I won’t be able to keep up payments.can I claim hard ship as I’m not working.do I get any money put in or a portion or do I have no choice to just cancel the policy and lose. I definitely can’t continue paying this policy

    • Jeremy Hallett


      I would need a little more information to help you really understand the life insurance policy that you own. Please share if it is a term insurance policy or a permanent (whole life policy) if you want a more full analysis of your options.

      But in direct answer to your question, there most likely isn’t an unemployment clause. There are a few companies today that offer a 6 month reprieve if one becomes unemployed, but that is a relatively new option and only a handful of carriers have it. Since the premiums are beginning to increase I would assume that you have had this policy for many years and it has come to the end of the term or it is a permanent plan that didn’t grow cash value enough to keep it stable in price.

      I am very sorry you are in this position. The only option that may be available is to call the insurance company and ask to reduce the amount of coverage. Many carriers will allow you to reduce coverage and the price will drop accordingly. When you speak with them please ask for an inforce illustration if it is permanent so you can see how it will perform going forward with the lower face amount. If it is term insurance and beyond the level period, the premiums will increase quickly so ask what they will be over the next few years as well.

      • KT

        My dad just called MetLife and got an update on the payments of his policy and he’s had this policy since 1980.. So what happens if he is not able to afford the payments being on a fixed income.. Can he get an option of choosing a cheaper plan or is he able to cash out what he has put in it..

        • Natasha Cornelius

          Hi KT, since your dad has had this policy for 40 years, I assume it’s a permanent policy and likely one with cash value? A whole life insurance policy, for example. If so, these policies can be cashed out for the surrender value. If he no longer needs the coverage, surrendering it for the cash is one option. Another option he should be able to do is ask for a reduced paid up policy from MetLife. MetLife will be able to calculate what death benefit he can have without paying any future premiums.

          How old is your dad? If he’s still insurable then another option would be to take the cash he gets from the surrender and buy a new policy.

          I suggest he call MetLife again and 1) ask what the surrender value is and 2) what his paid-up policy option is. Is he still in touch with the agent that sold him the policy? This person should be able to answer specific questions about the policy since he can look up the details. If not, a policy service representative at MetLife should be able to as well.

  6. sagicorlifeusa

    Very good write-up. I certainly love this website. Thanks!

  7. avnish sharma

    my policy six month premium is 2599/- lic taken in 2009. due to unwanted resion it is not paid from july 2014. what if i want to paid all now how much i have to paid give an idea. it can be renew or not.

    • Natasha Cornelius

      Hello Avnish,

      I would suggest calling your insurance carrier and asking if you can reinstate your policy. Most companies allow you to reinstate a lapsed policy up to five years from the end of the policy’s grace period, but each company varies. If you have had a significant health change since 2009, your insurance carrier may deny your request to reinstate the policy.

      To apply for reinstatement of your policy, you would need to complete a reinstatement application, a new health statement, go through a new medical exam, and pay whatever premiums that are due since the end of your policy’s grace period. Since you stopped paying in July of 2014, this would be a significant amount. Depending upon your age and health status, it may be a better option for you to apply for a new policy altogether. Contact your policy’s insurance company customer service. They will be able to help you.

  8. Libby

    I am 3 most behind on my life policy due 28th of each month. I now owe Feb,March,April but it’s not yet the 28th of May and they are demanding May”‘s pymt as well before the 28th with today being May 12th. Is it permittable

    • Natasha Cornelius

      Hi Libby,

      For term insurance: Most insurance companies have what is known as a grace period. This allows someone to get behind 30 days and the policy moves into grace. Grace means that if you die during that period, your family will still be given the death proceeds (although they will reduce the proceeds by the premium due). Between the 30-60 day period policies typically move into a lapse period, which means that a policy can still be re-instated without evidence of insurability, but the proceeds will not pay out if you die during that time. Since you are in month 3, I am surprised that the insurance company is asking for your payment without evidence of insurability (which could involve a statement of health up to possible new exam). It is very important to pay your life insurance premiums on time and not get behind with them when it comes to term insurance.

      For permanent insurance: There are different types of permanent policies, but most variations involve what is known as cash value. This is money saved up in the insurance contract that can be used to pay premiums when we fall behind. Permanent contract have much higher premiums than term insurance, but have this option of getting behind on premiums. When it comes to whole life insurance, generally after 60 days a policy will create an automatic premium loan against the case value to pay the premium, although you now have a loan against your policy in the amount of the premium and interest being charged on that loan. For universal life insurance contracts, the cash value is used to pay the expenses of the cost of insurance directly rather than taking a loan.

      To answer your question directly, it is permissible from the insurance carriers perspective to require you to make up all late payments along with the newest premium to put your policy back inforce. If you have any other questions on this, please just let us know.


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