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Life Insurance Grace Periods

Amy Danise

A life insurance grace period provides a little extra time to pay the premium before the policy lapses.

A typical life insurance grace period is 31 days, but check your policy to confirm.

If your payment is late, the life insurance company will mail you a notice stating the amount due, payment instructions and the grace period’s end date. Note that they email this to the last known address they have they for you. That’s why it’s important to let your life insurance company know if you move.

What if the insured person dies during the life insurance grace period?

If a policy payment is overdue and the insured person dies within the grace period, the life insurer will generally pay the death benefit minus any premium that would have been necessary to keep the policy in force up to the date of the death of the insured.

For example, if you were late on a $500 payment on a $500,000 policy, and died within the grace period, your beneficiaries would get $499,500.

What if I miss the grace period but still want the life insurance policy?

Many insurers offer “reinstatement” of life insurance policies that lapse due to lack of payment. There’s typically a reinstatement period, such as five years after the end of the grace period. Check your policy for rules on reinstatement. You generally can’t reinstate a policy if you’ve officially surrendered or terminated it.

To reinstate a policy you usually have to:

  1. Fill out a reinstatement application that includes “proof of insurability” that indicates the “risk class” of the insured person is at least as good as when the policy was sold. If you have developed health conditions since you bought the policy, you may not be able to get it reinstated.
  2. Pay all the premiums due from the time you stopped paying, with interest (such as 6%, but check your policy).