What is the Insurance Grace Period?
A grace period is the time after the monthly insurance payment due date, during which the payment can still be made without losing the insurance coverage. The grace period span depends on the insurance policy’s terms and conditions and can range from one day to three months. The insurance company may impose a penalty for non-payment within the grace period.
How Insurance Grace Period Works
Most life insurance policies have a grace period of thirty days from the due date of each premium. However, the premium payment mode may also affect the grace period. For example, life insurance policies with a monthly premium payment option have a grace period of fifteen days.
Life insurance companies do not charge interest on premiums paid during the grace period The policy terms determine the insurance coverage during the grace period If the insured person dies during the grace period, the insurers can deduct the unpaid premiums from the death benefits under the policy The policy will lapse if the premium is not paid during the grace period. However, there is still a chance to revive the policy during the revival period, which begins from the date of the first unpaid premium. The insurer has the right to accept or reject the revival request Finally, if the policy is not revived during the revival period, it will end or be discontinued, and you may lose the insurance benefits after the revival period is over. However, depending on the plan's terms and conditions, you may still receive the surrender value.
The Risks of Using Your Grace Period Too Often
Grace period usage may result in coverage loss or increased rates. Policy adjustment may be necessary for frequent grace period usage.
Due date modification may be requested to align with payday schedule. Automatic payments via direct deposit or credit card may prevent premium payment lapses. Cheaper coverage options may be consulted for unaffordable monthly premiums. These changes may avoid grace period usage every month.