What To Do if Your Life Insurance Lapses
A life insurance policy provides important protection for your family members and those who rely on you, but that protection is only available when the policy is in force. A lapsed life insurance policy will have no value, and provide no protection to your family in their time of need. It is important to renew those policies on a regular basis, making adjustments as needed and ensuring that you always have adequate life insurance coverage and a strong death benefit in place.
Even the best of intentions, however, can sometimes go awry. Perhaps you forgot to make a monthly, quarterly or annual premium payment for your policy. Maybe you misplaced your original term life insurance policy and forgot that it was coming up for renewal. No matter what the reason you now find yourself with a lapsed policy. What do you do now?
The first thing you should do is contact the life insurance company holding your policy immediately. The sooner you call the better your chances of getting that lapsed policy reinstated. If it has been only a short time since the policy was in force, the company may be able to reinstate the policy with no break in coverage. The individual policies life insurance companies use to determine when to reinstate a lapsed policy and when to deny such reinstatement will vary, but it never hurts to ask. If the problem was something as simple as a missed premium payment or a recently expired term life policy you may be able to reinstate your coverage with little trouble. . This is especially true if you have been a long time customer with the insurer, with no history of late payments, missed payments or other problems.
If it has a long time since the life insurance policy expired things can be a bit more complicated. For one thing the life insurance provider will be under no obligation to reinstate a policy that expired some time back, and they may be willing to do so. In addition prices may have changed since the policy was last in force, so even if the policy is reinstated the premium payments may be higher.
If the policy has been lapsed for some time it may be more beneficial to simply write a new policy and go through the application and approval process all over again. One upside of this strategy is that there may be new life insurance policies on the market that can save you money, get you additional coverage or both. Many people do not shop around once they have a life insurance policy in place, and many of those consumers are quite surprised at how much money they can save by changing policies or going with a different company.
Finally, if you feel that your policy should be reinstated but the company refuses to cooperate you may be able to get some satisfaction by contacting your state’s insurance commissioner. This governmental body has been set up to help consumers deal with insurance issues, so they may be able to convince a reluctant life insurance policy to reinstate your coverage and restore your policy to full force.