Missing a term insurance premium can happen to anyone, whether it’s because of a financial crunch, a hectic schedule, or just forgetting the due date. But does one missed payment mean your family’s financial protection is gone altogether? Not necessarily. Here’s what happens after you miss a term insurance premium and the options available to keep your policy active.
What happens if you miss a term insurance premium payment?
Missing a premium does not mean your policy becomes inactive immediately. Life insurers provide a grace period, giving policyholders additional time to pay the outstanding premium without losing coverage.
A grace period is the extra time available after the premium due date during which the policy remains active if the payment is made. The length of this grace period depends on your chosen payment frequency.
“For monthly premium payments, you are typically allowed a grace period of 15 days, whereas if you pay your premiums on a quarterly, half-yearly, or yearly basis, you get a full 30 days to clear the dues,” says Sabyasachi Sarkar, MD & CEO, Go Digit Life Insurance.
During this period, the policy continues to provide life cover, allowing policyholders to make the payment without any interruption in benefits.
Can nominees still receive the death benefit during the grace period?
The policy remains in force during the grace period. This means that if the insured person dies before the grace period ends, the nominee is generally entitled to receive the death benefit.
“If you die while in this grace period, the beneficiary will get the death benefit but may have the unpaid premiums deducted from that benefit before paying it out,” says Sarita Joshi, Head – Health and Life Insurance, Probus.
Once the grace period ends without payment, the policy may lapse and the benefit may no longer be payable.
