By Madeleine Maltese
The decline. Rest assured, there is no question here of moral collapse! You may have seen this term in an insurance contract or a letter from your insurer.
The decline. Rest assured, there is no question here of moral collapse! You may have seen this term in an insurance contract or a letter from your insurer.
If you have a life insurance policy, you have to pay a sum — the premium — at regular intervals, say every year, and you are insured. The dividend is payable on a specific date, but the insurer still grants you additional time (often 30 or 31 days) to pay without penalty. This is the grace period.
Your insurance contract ends if you still have not paid your premium at the end of the grace period. It is then said that it has fallen into disrepair, and the consequence is that you are no longer insured.
But all is not lost. Most insurers provide various processes to prevent this from happening and even reinstate a contract that has lapsed.
You must first repay the unpaid premiums for a contract to be reinstated. Also, note that, in most cases, the insurer will ask you to provide proof of your current state of health.
In other words: If your life insurance contract has lapsed, you are no longer covered… but you could request a reinstatement of the contract. Ask your adviser.
