What happens if I stop paying my life insurance premium?

by Floreena Thomas
What happens if I stop paying my life insurance premium?

The perfect age range to plan the protection of the family in the event of death, disability or dependency, ranges between 30 and 50 years. In this period, people usually settle down, form homes, and sign a mortgage while they have an active employment situation. However, certain economic problems may appear that force you to stop paying your life insurance bill.

Thinking that the premium for this type of policy is a superfluous or unnecessary expense is a serious mistake. Avoiding delays in the payment of life insurance is as high a priority as facing other daily obligations since it provides great protection when it is most needed, offering guaranteed capital in situations where income is lost or reduced.

Consequences of Failure to Pay Your Life Insurance Premium

The policyholder of life insurance is obliged to pay the premium in advance, either at the beginning at the time of contracting or when the policy is renewed. To avoid possible delays or non-payment of the receipt, it is advisable to calculate the amount before subscribing according to the coverages and conditions that best suit family needs.

According to the Insurance Contract Law, if the life insurance is stopped paying, the following can happen:

  • The insurer has the right to terminate the contract, which means that the policy ends.
  • Or, the company also has the option of demanding the payment of the premium due in an executive way.

In any case, article 15 of said law establishes that ” unless otherwise agreed, if the premium has not been paid before the loss occurs, the insurer will be released from its obligation .”

In addition, the coverage is suspended one month after the due date of the premium if it has not been paid. If the insurer does not claim payment in the following 6 months, it is understood that the contract is automatically terminated.

Before the company proceeds to cancel the policy, the policyholder can reactivate the coverage by paying the outstanding amount. The insurance will take effect again after 24 hours after the payment has been made.

What options are there when you can’t pay your life insurance bill?

It is important to clarify that non-payment of life insurance is not the best way to terminate the contract. As indicated by the Insurance Contract Law, the company can choose not to cancel the policy, which means that the debt would accumulate. This situation can lead to the judicial process to claim the payment of outstanding receipts from the defaulter.

To avoid this type of problem, and even the seizure of the estate, it is advisable to proceed in one of the following ways :

  • Pass term life insurance when possible. It is a cheaper way to maintain the policy since the expenses that are reduced over time are covered.
  • Cancel the policy following the instructions of the legal conditions of the contract and recover part of the accumulated capital.
  • Adjust coverage to reduce the amount of the premium.


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