If I can't pay my life insurance premium, what should I do?

If you were to find yourself in unexpected circumstances and weren’t able to pay your existing life insurance policy premium, it’s worth knowing and understanding the options available to you, as well as the possible consequences. Life insurance is arguably one of the most important insurances you can have, so it’s important to make sure it’s never regarded as too much of a financial commitment or a burden on your finances, as not having it could turn out to be a truly false economy.

How it would affect you depends on the type of policy you have, your level of coverage and the terms and conditions that are specific to your policy. There are probably more options than you might think and insurers may be able to alter your existing policy to assist with affordability, or even offer payment holidays. Please speak to your provider for further details.

‘Term’ Insurance

It’s more simple if you have a term insurance policy. In essence, if you were to stop paying your premium, you would no longer be covered. If you were insured with us, you would receive communication letting you know your coverage has now lapsed and you would need to take out a new policy, should you wish to (once again) have life insurance cover in place.

‘Whole-of-life’ Insurance

It’s a bit more complex when it comes to what happens with a ‘whole-of-life’ policy, however, depending on the specifics of your policy, you’re most likely have the following choices:

1) Cash out the policy

This means that you would stop paying your monthly premiums and collect any available cash savings (attached to the policy). You would then no longer have any life insurance in place, however you would then be eligible to receive some of the proceeds of the policy. You may, however, have to pay tax on any cash value if the sum were to exceed what you’ve already paid in your premiums.

2) Policy will lapse

If this happens, ask your insurance company to see if there’s an option for the policy to be reinstated. Some insurers may allow this if you do it within a certain agreed time period of the policy lapsing. You will most likely have to pass a physical examination to be eligible for the reinstated policy and pay back the premiums you would have paid. The good news is that annual premiums for a reinstated policy are likely to be much lower than those for a new, comparable policy.

3) Non-forfeiture options

There may be a ‘reduced paid-up’ option. This means that you could stop paying premiums completely in return for a reduced death benefit - also with no cash saving.


In any case, it’s worth knowing that the team at Cavendish are at hand to answer any questions you have about low-cost life insurance. If you already have a life insurance policy in place with another provider and you’d like to see how we could lower your monthly premiums, please get in touch on 03456 442 540 and we can see what we can do for you.

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