Term Life Insurance Articles
How Lapsing Your Term Life Insurance Policy Could Get You Into Future Trouble
2009-12-30
In the current economy, it's very tempting to cut corners in order to save costs. In many instances, this can be helpful, but if you're thinking about skipping a payment on your life insurance policy, think again. For term life insurance policies, this can invalidate the possibility of pay outs to your beneficiaries, and it can prevent you from being able to get a policy in the future.
Your own consequence will depend on the state of your policy, the terms that the policy outlines for missed payments, and the frequency of lapsing life insurance payments. If you have a long term life insurance policy that's designed to be convertible or has built up a cash value or investment pool in some way, many insurers will simply draw from the savings you've accumulated to pay the extra payments. They'll note that you'd missed a payment, but will not penalize your policy further. In some cases, the entire policy may be invalidated until the missed payment is made up--or the policy could be canceled entirely. Read the paperwork and contract provided with your policy for the exact details.
If you eventually cancel your policy and begin looking for term life insurance quotes, you may run into more problems caused by the missed payment. Insurers might refuse to offer you a new policy, as they'll want to avoid any risk of loss. While insurance companies are less likely to lose serious amounts of money on late payments than, say, an investment firm, they still have a definite interest in receiving timely payment, and they may lose money on commissions paid to insurance agents when you skip a payment in the first year of your policy. If your policy completely lapsed and was canceled due to non-payment, it can be especially hard to find life insurance with the type of coverage that you're looking for without a high premium.
The best tactic is to pay your premiums on time. If you feel that your premiums are too high, look for other term life insurance quotes online and consider changing your policy. Remember that it's best to stick with a single insurer once you've picked up coverage that you're happy with. Changing your insurance company multiple times can eventually have a detrimental effect on your ability to get a policy for a good rate. A bad rate will cost you more than a single month's premiums, of course, so do your research before you buy your first term life insurance policy. This will allow you to find great coverage at a great rate.
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In the current economy, it's very tempting to cut corners in order to save costs. In many instances, this can be helpful, but if you're thinking about skipping a payment on your life insurance policy, think again. For term life insurance policies, this can invalidate the possibility of pay outs to your beneficiaries, and it can prevent you from being able to get a policy in the future.
Your own consequence will depend on the state of your policy, the terms that the policy outlines for missed payments, and the frequency of lapsing life insurance payments. If you have a long term life insurance policy that's designed to be convertible or has built up a cash value or investment pool in some way, many insurers will simply draw from the savings you've accumulated to pay the extra payments. They'll note that you'd missed a payment, but will not penalize your policy further. In some cases, the entire policy may be invalidated until the missed payment is made up--or the policy could be canceled entirely. Read the paperwork and contract provided with your policy for the exact details.
If you eventually cancel your policy and begin looking for term life insurance quotes, you may run into more problems caused by the missed payment. Insurers might refuse to offer you a new policy, as they'll want to avoid any risk of loss. While insurance companies are less likely to lose serious amounts of money on late payments than, say, an investment firm, they still have a definite interest in receiving timely payment, and they may lose money on commissions paid to insurance agents when you skip a payment in the first year of your policy. If your policy completely lapsed and was canceled due to non-payment, it can be especially hard to find life insurance with the type of coverage that you're looking for without a high premium.
The best tactic is to pay your premiums on time. If you feel that your premiums are too high, look for other term life insurance quotes online and consider changing your policy. Remember that it's best to stick with a single insurer once you've picked up coverage that you're happy with. Changing your insurance company multiple times can eventually have a detrimental effect on your ability to get a policy for a good rate. A bad rate will cost you more than a single month's premiums, of course, so do your research before you buy your first term life insurance policy. This will allow you to find great coverage at a great rate.
