Life insurance provides crucial financial protection for beneficiaries around Olathe, KS, but maintaining the policy is essential. A lapse in coverage has dire consequences for all parties involved.
What Is a Policy Lapse?
A policy lapse occurs when a life insurance policyholder doesn’t pay the monthly premiums within the grace period. This will result in the policy’s termination. The grace period typically lasts 30 to 31 days after the premium due date. Once the policy lapses, the insurer is no longer obligated to provide coverage, and beneficiaries may not receive the death benefit.
Consequences for Beneficiaries
Beneficiaries are generally not entitled to the death benefit if a policyholder dies after the policy has lapsed. This leads to unfortunate financial hardship for families who are now responsible for covering funeral costs and other expenses, from mortgage to household bills.
Reinstatement Options
Most life insurance policies offer a reinstatement period during which the policyholder can restore coverage by paying past-due premiums, often with interest, and providing proof of insurability. This period typically lasts three to five years after the lapse. Reinstating the policy can help regain coverage but may come with additional costs and requirements. It is crucial to act promptly to avoid a permanent loss of coverage.
Preventing Policy Lapses
Policyholders should set up automatic payments or reminders to ensure premiums are paid on time. Regularly reviewing the policy and updating payment methods can also help maintain continuous coverage. Keeping the communication line open with the insurance provider is critical to avoid policy lapses.
AHI Group Helps Guide You
AHI Group will help guide you and show you how life insurance can save you money in the long run. Our team covers the Olathe, KS region. Contact us today.
