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To keep a life insurance policy active and ensure your beneficiaries are getting the death benefit, you have to pay monthly or annual premiums. But if you stop paying those premiums, your policy will lapse and you will no longer have life insurance coverage.

If you miss a payment and want to keep your policy active, don’t fret. This lapse usually doesn’t happen right away — insurers will generally have a grace period of 30 days. But make sure to make your payment within that time frame to avoid a policy lapse. If your policy lapses and you decide to buy new coverage later, it’ll likely be more expensive because the cost of life insurance increases as you age.

How does a life insurance policy lapse?

A life insurance policy lapses if you fail to pay your premium after the grace period ends. You generally have 30 days to make a late payment, but you should check with your insurer, as some companies may only have grace periods of 15 days.

Your insurance company is required to inform you before a policy lapse, so make sure your policy is always updated with your most recent contact information.

What happens if a term life insurance policy lapses

If a term life insurance policy lapses, you no longer have life insurance coverage. Because term life insurance doesn’t come with any extra bells and whistles, losing the policy is as straightforward as having it.

You will not be refunded any premiums.

What happens if a permanent life insurance policy lapses

If a permanent life insurance policy lapses, there may be enough cash value built up to keep it in force for a while. Often an insurance company will tap into a policy’s cash value to cover premium payments if you stop making payments.

Michael Hartmann, a life insurance expert and CEO of, adds. “If the cash value can no longer sustain the premiums, the policy will eventually lapse and no longer be in force.”

If your policy is young enough, you may need to pay a surrender fee.



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How to reinstate a lapsed life insurance policy

Depending on the type of policy you had and who your insurer is, you may be able to reinstate a lapsed life insurance policy. If the insurer allows you to reinstate your policy, they’ll likely require that you prove you can pay for the policy. This will likely include proof of income and that you are in good financial health.

The insurance company will also require that you pay back any missed premiums. This may still be the cheaper option than purchasing a new policy altogether. Life insurance prices increase with age. Any new health conditions can also increase your premium. However, if your policy lapse was fairly recent, your premiums may be comparable enough that paying back the premiums will actually be more expensive. You will want to compare options to see which one is more affordable.

How to prevent a life insurance policy lapse

You can take a few easy steps to avoid losing your life insurance policy:

  • Make automatic payments: Similarly to paying off a credit card, you can enroll in automatic payments so that you don’t need to log in to pay each month or year. The insurer will automatically withdraw the funds from your bank account.
  • Adjust your death benefit: If your policy is out of your budget, lower the coverage amount so it’s more affordable. It’s better to have some coverage over no coverage at all.
  • Pay annually: With only one payment a year, there are less premiums to keep track of.

A life insurance policy lapse means losing pivotal financial security for your loved ones. But by taking the right steps, you can secure their financial health while paying within your budget.

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