Life insurance

What Happens If You Miss a Life Insurance Premium Payment?

By Jessica Sillers Jul 1, 2025
A yellow puzzle piece lies on top of a wide pink puzzle board, positioned as if ready to be placed.

In this article

How to Avoid a Life Insurance Policy Lapse

What Happens If I Miss a Premium Payment?

Can Cash Value Prevent My Policy From Lapsing?

Busy parents may have heard the popular metaphor of “juggling glass and rubber balls” to describe our priorities. Basically, drop a “rubber ball” (e.g., Silly Sock Day at school), and there’s no harm done. Miss a “glass ball” (e.g., figuring out why the “check engine” light is on), and there could be more serious consequences. The message is we’re all going to drop a ball now and then, but we can try to limit the damage.

Ideally, you’d never miss a bill deadline, but is being a few days late on a life insurance payment more of a rubber or glass ball situation? The quick answer: If you miss a life insurance premium payment, your coverage typically won’t end immediately, but you should check with your insurance company to see if you have a grace period. At any rate, you’ll likely want to take swift action to make sure your policy stays active. Here’s what you can do to avoid issues and how to handle it if you do miss a life insurance premium payment.

How to Avoid a Life Insurance Policy Lapse

Your best strategy to keep your life insurance coverage running smoothly is to avoid issues in the first place. Life insurance is a legal agreement, and making payments on time is a big part of your side of that agreement. So, for starters, you can make paying your premiums on time easier with these tips:

  • Choose a payment schedule that works for you: Monthly premiums are common, but not necessarily the only option. Some policies offer quarterly, semi- annual or annual premium payment options.

  • Set auto-pay: Most insurance providers make it easy for you to set up automatic, online payments so you don’t need to think about it.

  • Keep bank information up to date: If you move or change banks, make sure you update your information with your insurance provider so your premiums come out of the correct account and the insurer can reach you with any important information about your policy.

  • Set and follow reminders: If auto-pay isn’t a good option for you, or you need an extra reminder, make a note in your calendar in advance to keep track of your premium due dates.

What Happens If I Miss a Premium Payment?

Your life insurance coverage offers some financial security for your family if you were no longer here, so ideally you’ve got habits in place to make it easy to stay on top of premiums. That said, sometimes despite your best efforts, you might run into unexpected circumstances or make an error that leads to missing a payment. So what happens now?

Grace period

As soon as you miss your premium payment due date, most life insurance policies set a certain amount of time as a grace period. Rules might vary by state. For example, North Carolina state law requires life insurance providers to offer a minimum grace period. Look up your state’s Department of Insurance to learn more about what state laws may apply for life insurance in your area.

During the grace period, your policy is still in effect. If you pass away and your beneficiary makes a claim, the insurance company would still process the claim. They’d likely subtract the overdue payment and any applicable interest from the death benefit.

Letting a premium payment go overdue and send your policy into a grace period is risky nonetheless in terms of ensuring your loved ones get the benefit you planned for them. Loved ones need to put together certain documents (e.g., certified death certificate) in order to file a claim, which can take several days to a few weeks. If your policy is already in a grace period due to nonpayment, it might lapse during the time your loved ones spend coordinating final arrangements and preparing to submit a claim. For obvious reasons, all of this can make handling the claim more complicated.

In short, during your grace period, you’re still covered by your policy—but it’s smart to take quick action to get payments current. Send in your payment, plus any interest or late fees, and you’ll be back on track.

Policy lapse

After a certain window of time, the grace period ends and your policy will lapse (the grace period can vary by insurance provider and by state, so read your policy details closely). The insurance company is required to notify you that your policy has lapsed.

A policy lapse is a more serious step where your coverage will go out of effect. If your policy lapses and you pass away, the death benefit will not be paid to your beneficiaries.

The bright spot is that in many cases, you can still get your coverage back by taking swift action. Most life insurance companies have a “reinstatement period” that can allow you to restore your coverage.

The sooner you contact your life insurance company, the better. If you reach out to reinstate your policy soon after the policy lapses (e.g., within 30 days with some insurers), you may be able to get your policy back without additional questions or underwriting. You’ll need to pay any overdue premiums, interest and fees, and your “reinstatement premium” may be higher to cover the costs of getting coverage back in place. Reinstating a policy usually means keeping the same terms and premium rates as when you initially purchased coverage, which can be an advantage because rates increase as you get older.

If you wait longer to reinstate a life insurance policy, the insurer may require you to answer health questions or possibly take another medical exam. If your health has changed significantly, it can be more complicated to reinstate your policy (so it’s in your best interest to avoid a policy lapse or, at minimum, act quickly to reinstate a policy that does lapse). You’ll have to pay back previous premiums with any interest and fees. The terms of your contract will give details about reinstatement terms and processes.

Depending on your specific details, it can sometimes be worth comparing the costs of reinstating your policy versus buying a new policy.

Policy cancellation

A reinstatement period doesn’t last forever. If you don’t pay your life insurance premiums, coverage will end, and when the policy cancels, you won’t be able to get it back. At that point, you’ll need to apply for a new policy to get coverage.

Can Cash Value Prevent My Policy From Lapsing?

If your life insurance policy has a cash value component, this can sometimes be a stopgap against your policy lapsing, but it’s not a guarantee.

Certain types of permanent life insurance, such as whole life or universal life, use part of your regular premium payment to accrue a cash value for the policy. The cash value is separate from the death benefit, and you may be able to access and use funds from the cash value during your lifetime. In some cases (particularly universal life insurance), you can set up your policy to withdraw available funds from the cash value to cover your premium if you miss a payment. This can help extend the time before your policy would lapse and end coverage, but it only works if you’re set up for this option and there’s sufficient funds in the cash value account. Withdrawals from cash value may be subject to charges; interest is charged on loans, which may generate an income tax liability, reduce the account value and death benefit, and could cause the policy to lapse.

If you want to end your life insurance coverage, it’s likely better to look into surrendering your policy rather than letting the cash value dwindle until the policy lapses. Consider your pros, cons and alternatives carefully—you might find ways to keep the right amount of coverage for you while also accommodating other goals (e.g., lowering premiums).

Life insurance can be a powerful tool to help protect your family, as long as you’re keeping up with your end of the agreement, too. Take what steps you can to make sure you’re making premium payments in time, and you’ll have a stronger sense of security about your policy.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards. This article has been reviewed and approved by a compliance professional who is a licensed life insurance agent.

Information provided is general and educational in nature, is not financial advice, and all products or services discussed may not be offered by Fabric by Gerber Life  (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Consult an attorney or tax advisor regarding your specific legal or tax situation. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. The views and opinions of third-party content providers are solely those of the author and not Fabric by Gerber Life.


Author bio headshot, Jessica Sillers
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Jessica Sillers

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