From a very young age, we are always advised to invest in an insurance policy for a financially secure future. Most of these insurance plans kick in if the policyholder dies unexpectedly. In such a scenario, the coverage amount that the insurance plan promised is paid to the beneficiaries of the policy (mostly spouses and children of the policyholder) after a claim is filed with the insurance company. All of these things sound highly reassuring and make us want to invest in one. However, a lot of people are unaware of the terms and conditions of the policy especially when it comes to term insurance premium payment.

The premium is the amount you need to pay to the insurance company if you want to keep your insurance plan active. The amount you need to pay is pre-decided at the time of purchasing the policy. However, there are times when you may be unable to make the premium payments because you either forgot about them or are simply experiencing a cash crunch at that moment. But do you know what happens if you fail to make the term insurance premium payment? Let us talk about that in this article.

Firstly, insurance companies consider the possibility that you may end up delaying the premium payment once in a blue moon. This is why most insurance companies offer their customers a grace period of up to 30 days to pay their premiums. However, when you make delayed payments, you may need to pay a fine. But if you fail to make the premium payment even during the grace period, the insurance company is legally in a position to cancel your insurance plan. And as you know lapsed insurance policy becomes inactive and useless since it offers no protection whatsoever.

In such a scenario, you have two options. You can either reinstate your old insurance plan by getting in touch with your insurance provider or you can consider buying a new policy altogether. We recommend opting for the former because buying a new plan will most likely put you in a position to pay a higher premium. But some insurance companies won’t permit restoration or reinstatement of the policy. And you may have to buy a new insurance policy regardless of the cost.

On the contrary, we recommend making sure that you pay your premiums on time instead of going through all the trouble that follows if you miss the payments. Automated payments and reminders may help in certain cases.

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