Life Insurance Grace Period – Things You Must Know!

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  • Post last modified:September 14, 2019

If you currently have term life or whole life insurance, have you ever wondered what would happen if you miss a payment?

If you have been paying your premium for years, but you run into financial trouble and cannot afford your payments, will all of the money that you paid in go to waste when the policy is canceled?

Fortunately, most of the companies offer life insurance grace periods.

Life insurance companies understand that people run into financial trouble from time to time. They offer grace periods so that you won’t lose your coverage if you find yourself in a bind.

What Is An Insurance Grace Period?

A grace period is a set amount of time that your insurer will keep your policy active if you haven’t paid your premium. The grace period for your policy would depend on the company that holds your policy.

Grace periods can also vary from state to state. The terms of your grace period are outlined in your policy contract. Most insurers offer a grace period of 30 days from the date that your payment was due.

Do I Need To Call To Activate My Grace Period?

Most insurers will activate the grace period as soon as your payment is late.

You can call and let your insurer know that you don’t have the money to pay the cost of the premium and let them know when to expect the money. The representative that you speak to, will put a note in your account.

However, if you forget to make the call, don’t worry. The grace period will start automatically on the date that your payment was late.

What Happens If I Die During the Grace Period?

If you missed a premium payment and you are taking advantage of the grace period, and you die, you will be covered.

As long as your grace period has not lapsed on the day of your death, your insurer will pay out the full amount listed in your policy minus the money that you owe for your last premium.

How Many Times Can I Take Advantage Of the Grace Period?

Most insurance companies do not have a limit on the number of times that you can take advantage of the grace period. The day that your payment becomes late, your grace period will automatically begin.

What Happens If I Can’t Make My Payments Within the Grace Period?

If you are unable to come up with the money for your premium within 30 days, you can have your policy reinstated. Many insurers allow you to reinstate your policy up to five years from the end of your grace period.

Since the terms of the policy can differ from company to company, it is a good idea to check your original policy to find out how much time you have to reinstate the policy. You can also call and speak to a representative.

It is important to understand that there is more to reinstating the policy than you might think.

The first thing that your insurer would require is that you pay all of the premiums that were due from the end of your grace period until the day you file for reinstatement. If you allowed your policy to lapse weeks or years, this could end up costing you a lot of money.

When your insurer has been received, and your account is up to date, there are a few other things that most insurers will require.

i) Reinstatement Application: Before your lapsed policy can be reactivated, you will need to fill out a reinstatement application. This will be similar to the application that you filled out when your first bought your policy.

ii) Health Statement: If you are reinstating your policy within 30 days of your grace period ending, it is likely that you won’t need to worry about this statement.

Also, there would be no underwriting necessary if you are going to have your policy reinstated. If it has been more than 30 days since your grace period ended, most insurers would need a health statement.

Most companies will want to know if your health has changed since you first applied. If your health has declined, it is essential that you make your premium payment within the grace period so that your policy will remain the same.

Also, if your grace period has ended and your health has declined, don’t try to lie on your statement. If your insurer finds out during the claims process that you lied on your health statement, your insurer can dispute all or part of the benefits owed to your beneficiaries when you die.

iii) Medical Exam: If it has been a while since your grace period ended, your insurer will likely require that you take another medical exam if your policy is going to be reinstated.

Most insurers require this if it has been six months since the end of your grace period ended. Since all life insurance companies are different, you should contact your insurer to find out what their policy is.

Also, if the answers on your health statement suggest that there have been changes in your health, you could be required to take a new medical exam at any time.

What If I Cannot Afford My Premiums After Frequently Using the Grace Period?

shortage of money putting you in grace periodIf you have had to use your grace period often because you are struggling to meet your premiums, you might want to think about finding a cheaper company or going with a lower plan with lower premiums.

This would prevent you from using the grace period and potentially allowing it to lapse.

If you are going to cancel your policy completely and you have no intention of reinstating it, there are a few ways that you can terminate it.

i) Don’t Make Any Payments: If you stop paying your premiums and you are past the grace period, your policy will lapse and be canceled. If you pay your premiums monthly, this could be an option for you.

However, if you made your payments semi-annually or annually, you will be losing money that belongs to you. In cases like this, there is another option.

ii) Formally Cancel Your Policy: If you know that your premiums are too much for you to afford, you can call your insurer to formally cancel your policy. You can give them the specific date that you want the policy to be canceled.

If you are in the middle of your grace period, your insurer will cancel the policy on the day that the grace period lapses. If you are only a few months into an annual payment, your insurer will refund you a prorated share of your premium.

While you have your insurer on the phone, you can find out if there are any cheaper policies available that will fit in with your budget. Having less coverage is better than having no coverage at all.

How Can I Avoid the Grace Period?

If it is not your finances that have your taking advantage of the grace period often but your own forgetfulness, there is a way that you can keep this from happening. Many people lead very busy lives.

Because of this, sending out a payment for your life insurance premiums can slip your mind. Most insurance companies today have an automatic payment option. They will automatically take the money from your bank account on the day that the payment is due. This means you will never forget to make a payment again.

If you are thinking about using the automatic payment option, just be sure that you have enough money in your bank account to cover the cost of the premium. If you don’t, you will find yourself using the grace period once again.

You should start thinking about life insurance when you are young. If something happens and you die suddenly, your family will be taken care of.

If you cannot afford an expensive life insurance policy, you should consider one that will cover your burial expenses. The average burial expenses can cost between $7,000 and $10,000.

If you have life insurance for your burial expenses, your family wouldn’t be responsible for paying the bill. If you have a policy and you forget to make the payment or if you don’t have the money to cover the cost of the premium, don’t worry. You can take advantage of the grace period which will keep your policy in good standing as long as the payment is made before the end of the grace period.


Life insurance is something that everyone should have, regardless of your age or your health. Many young people believe that they don’t need insurance until they are in the ’60s or ’70s. This is a mistake.

Young people can get sick or get involved in an accident that can take their lives. If they don’t have life insurance, their family wouldn’t be protected. There are insurance policies available that will fit in with any budget.

Choose that amount of premium that you can pay easily every month and don’t need to use the grace period.

Linda Chavez

I'm a burial & senior life insurance expert, independent agent, Founder & CEO of Seniors Life Insurance Finder. I have been working in this sector since 2004 and established my own company in 2014. I have a team of seven members, and we are trying hard to share the knowledge we've gathered. We know how difficult often it is to find an affordable policy. Hence, we are doing our best to help you.