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What If I Can’t Pay My Term Life Insurance Premiums on Time?

February 28, 2018
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.

Sometimes life doesn’t always go as planned—that’s one reason term life insurance is a great financial product to own. There is no penalty for cancelling a term policy either. If you stop paying your premiums, your policy terminates. No cancellation fees.

But what happens if I just can’t afford to pay the premiums on time?

Maybe you are injured and out of work, or an emergency drained your savings, or you simply forgot to send in the check; whatever the reason, you didn’t pay your premiums.

What happens now?

Whether you are struggling financially or simply forgot to pay the bill, your term life insurance policy may lapse, and you’ll no longer be covered.

All term life insurance policies have a grace period, with most of them lasting 30 days from the original due date. However, if you fail to make the premium payment within the grace period, your term life insurance policy will lapse, and you will need to have it reinstated.

Before we get too much into specifics, let’s get a quick reminder of how life insurance works.

A term life insurance policy is a contract between you and the life insurance company. You agree to pay a certain amount and they promise to pay out a lump-sum to your beneficiaries should you die. If you stop paying the agreed upon amounts, then your policy will simply lapse and you would no longer be covered.

Don’t panic immediately though, because all term life insurance policies include that grace period we just mentioned.

Life Insurance Payment Grace Period

As long as you make the payment—and the insurance company receives and processes your payment within that grace period—your policy will not lapse. So, while it is important for you to make your payments on time, you will be relieved to know that you are still covered during the grace period.

Example: Your term policy’s monthly premium is due April 30th but you are unable to make the payment by that date. If you die May 5th, the insurance company will still pay out the death benefit because you died within the grace period.

See what you’d pay for life insurance

Comparison shop prices on custom coverage amounts from the nation’s top carriers with Quotacy.

Lapsed Life Insurance Policy

If you aren’t able to make the premium payment by the due date (or within the grace period) your policy will lapse.

A lapsed policy means that it is no longer active. You will not be covered and your beneficiaries would not receive a death benefit if you died. Additionally, your past payments will not be refunded if your policy lapses.

After a policy first lapses, the owner may have the option to reinstate the policy within a certain period of time (depending upon the company), but you may have to prove your insurability by going through the underwriting process again.

Reinstating a Lapsed Life Insurance Policy

If your policy lapsed but you still want to be covered, you can apply for reinstatement. Each company has its own guidelines for reinstatement but most will allow you to apply up to five years from the end of the policy’s grace period.

What is usually required when applying for reinstatement:

  • Reinstatement Application: All companies will ask you to complete a reinstatement application that is similar to the original application you filled out for the policy.
  • Health Statement: Most companies want to see if anything has changed with your health since you first applied. If you apply for reinstatement within 30 days of the grace period ending, many insurance companies won’t even need this statement and no underwriting would be necessary to reinstate the policy.
  • New Medical Exam: Most companies won’t require this if you apply for reinstatement within a certain amount of time, typically within six months of the end of the grace period, but this varies by insurance company.

Even if you apply for reinstatement within a couple months, you may still be asked to complete a new medical exam if the answers on your health statement suggest you’ve experienced some health changes.

It would not be wise to attempt to trick the system and lie on your health statement. If it is discovered during the claims process that you lied, the insurance company can dispute all (or part of) the benefit your beneficiaries would receive upon your death.

As a general guideline—the less underwriting the better—because if a new health condition is discovered, you may no longer qualify for the same rates and your premiums would increase when reinstated.

Finally, it’s important to know that, if you are approved for reinstatement, you will be required to pay the premiums due from the end of the grace period. If you’ve let your policy lapse for a few years—that could be a significant amount.

If you haven’t paid your term life insurance premiums and let your policy lapse for a considerable amount of time, applying for a new policy altogether may be a better choice.

Automatic Payments

If the reason your policy lapsed is because life got crazy and you simply forgot to send in a check, we recommend that you make the switch to automatic payments.

All major life insurance carriers offer the ability to automatically draft your premium payments from your checking account.

Make life easier on yourself: set it and forget it.

With automatic payments, you’ll never need to worry whether your loved ones are financially covered if you would die unexpectedly.

Help for Lapsed Insurance Policyholders

If your life insurance policy has lapsed and you are shopping for a new one, take a minute to see how little it would cost you to get a new term life insurance policy.

At Quotacy, there is no need to enter any personal contact information to get your comparison quotes. With our comparison tool, you’ll be able to see your quote instantly and adjust the coverage amount and term length as needed before starting your application.

Remember, term life insurance gives peace of mind by ensuring your loved ones are protected—so it’s worth it to set up a stress-free system to pay your premiums. But, if you didn’t, no worries. We can help you the second time around as well.

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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