What is a Life Insurance Grace Period?
Life insurance usually comes with a grace period, but what does that mean exactly and how does it affect you?
The grace period is the time after a missed insurance premium is due and where a life insurance policy will not lapse even though the payment is overdue. The grace period is actually a very useful feature, whose inclusion in all life insurance policies is mandated by all 50 states. The minimum grace period varies from 28-31 days and depends on individual state laws, but many companies offer longer grace periods. Learn more about the grace period and what it does to your life insurance policy and how it affects your payments.
Grace Period’s Purpose
Saving Death Benefit Payments to Beneficiaries
If a payment is slightly late, the grace period prevents a life insurance company from denying a valid death claim. This is important to the beneficiaries who may be relying on the proceeds of the death benefit.
If a policy lapses, the insurance company is not obligated to reinstate the policy without underwriting. Companies will offer a period of time after it lapses that an owner can still submit a payment and bring back the policy into good standing without the need for the insured to pass through the underwriting process all over again.
Without a grace period, insurance companies would be able to pick and choose the most favorable clients for whom they will reinstate insurance—which would be highly immoral.
Grace periods are here to help you in case you miss a payment on your life insurance period. For help finding the right life insurance policy, and an expert to guide you through the deeper legality differences between term and whole life policies, contact Remland Insurance in the City of Orange. We will work with you to find the right policy that will meet the needs of your family, at the right grace period and price.