I Cant Pay My Life Insurance Premiums
What happens if you can no longer afford to pay for your life insurance premiums? Depends on the type of policy you have and the terms and conditions.
If you are covered under a Term Life Insurance plan, stop paying and your coverage lapses. Contact the life insurance provider and determine if they can provide some grace period for re-instatement.
If you have Whole Life or Permanent Life Insurance you may have more options. Cash out the policy, accept a reduced coverage amount, check for a re-instatement time period or just let the policy lapse. If you cash out the policy, you will no longer be covered by life insurance and may owe some income tax if the proceeds exceed the premiums paid. If you accept reduced coverage, you will no longer be making payments, but will instead convert to a paid up lower death benefit policy with no cash value. Some insurers will allow you to re-instate your policy by paying back premiums and interest.