How to Prevent a Life Insurance Lapse

How to Prevent a Life Insurance Lapse

Did you know that 54% of all people in the United States are covered by life insurance?

If you're someone that's looking around for a life insurance policy, you may be wondering how you can avoid a life insurance lapse. When you have a life insurance lapse, you, as well as your family members, aren't covered with life insurance. That's why it's so important to make sure that you never have a lapse with your insurance.

In this guide, we're going to break down how you can prevent a life insurance lapse. Keep reading to learn more!

What Is a Life Insurance Policy?

Life insurance is a type of contract that involves your insurer, policyholder, and yourself. In a life insurance policy, you're ensuring that any beneficiary that's listed will receive a specific amount of money in the instance that you pass away.

However, in exchange for you signing this contract with the insurer, you'll a premium. Some life insurance policies have a monthly payment option that you'll owe. Yet, other policy options will require a one-time payment option.

What Is a Lapse In a Life Insurance Policy?

A lapse in a life insurance policy is the removal or the expiration of the life insurance policy. This can happen with a life insurance policy because of a lack of payment, inaction, or a certain period of time passing. When a life insurance policy lapses, it means that the person who is receiving the benefits of having a life insurance policy will no longer get the benefits.

In the majority of instances when a life insurance policy lapses, it's mainly because someone in the party didn't act on the obligations of the contract. Another common cause of a lapse in a life insurance policy is because there was a breach in the policy or contract. 

Can You Get Your Life Insurance Policy Reinstated?

The process of having your life insurance policy reinstated after its lapse is possible. However, the only way to get a policy reinstated can only happen after the grace period is finished. Once the grace period is finished, this is when the contract is considered to be no longer in existence.

The process of having your life insurance policy Reinstated after its last isn't enforced by the law. So, only some types of life insurance providers may offer the possibility of you getting your life insurance policy and said after it’s lapsed.

During the reinstatement process, there are certain requirements that have to be met for the policy to be successfully reinstated. However, these requirements are dependent upon the insurance company and may vary depending on what company you choose. Also, these requirements May differ depending on how long it's been since the policy lapsed.

How to Avoid A Life Insurance Policy Lapse

If you're worried about your life insurance policy lapsing, it's important for you to find ways to ensure that this doesn't happen. Here are a few tips on how to avoid a life insurance policy lapse:

Make All Your Payments

The first way to ensure that you don't have any life insurance policy lapses to make sure that you're making all of the payments that are necessary. There are some companies I will offer you the option to make automatic payment on your life insurance policy.

If possible, opt for this option because the money will be automatically deducted from your account. You won't have to worry about making sure but you remember how to make any payments, because it’ll be done for you.

Keep Up With The Correct Address

If you recently moved or you're planning on moving, make sure that you provide life insurance company with the correct address that you have. This will ensure that all of the bills that you have with our company will be sent to the correct address, so you can remember to make your payments on time.

Reinstate As Quickly As Possible

If you accidentally let your life insurance policy lapse, make sure that you reinstated as quickly as you possibly can. Don't wait for the grace period to end for you to go about reinstating your policy. This will ensure you don’t have to go through the entire process of opening your policy back up again.

Use Cash Values

If you have a cash value on the policy you pay towards, using that immediately. This cash value will cover your missed payment, so you don't have to worry about going into a grace period. It's not ideal to always use this, but it's a type of fail-safe in case anything does happen to where you're not able to make a payment. 

Open All The Mail You Get

When you’re going through your mail and you see letters from your life insurance provider, make sure to open every single piece of mail you get. Don’t assume that some of the pieces you get from the company are just junk mail.

Some of the letters you’re getting could be a notification that one of your payments didn’t go through. Or, it could be other important information about your life insurance policy!

Understand How to Prevent a Life Insurance Lapse

Thankfully, using these above-listed tips will help you to ensure you're able to avoid a life insurance lapse. Keeping your life insurance policy updated and active will give your dependents financial protection in case anything happens to you.

Are you looking for an insurance company that'll provide you with a policy? We're here to help you. Check out our website to learn more!