What is the impact of not paying premiums on a life insurance policy?

When premiums are not paid on a life insurance policy, the coverage is at risk of lapsing. This means that the policyholder may lose their coverage, and the insurance company will no longer be obligated to pay out a death benefit or provide any other benefits outlined in the policy. Life insurance policies typically have a grace period during which the policyholder can pay overdue premiums; however, if the premiums are not paid by the end of this period, the policy will lapse.

This lapse can have significant implications, as it not only leaves the insured without coverage but may also affect any cash value that may have accumulated in the case of whole or universal life insurance policies. Additionally, if the policy lapses and the insured subsequently wishes to reinstate it, they may face higher premiums due to increased age or changes in health status. Therefore, maintaining timely premium payments is essential for keeping the policy active and ensuring continued coverage.