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Life insurance grace period

Can’t pay your premium? Luckily, many policies offer some breathing room to make up a missed payment.

Life insurance is a contract between you and your insurer. In exchange for your premiums, your provider offers coverage. But if you miss a premium payment, your provider will usually give you some time to settle that debt.

What is the life insurance grace period?

The grace period is the amount of time your insurer will give you to pay your premium without penalty. If you were to die during the grace period following a missed payment, your beneficiaries would still receive the death benefit – minus the amount of the outstanding premium payment. While an insurance company is not legally required to provide a grace period, most policies include one.

How long is the grace period for an individual life insurance policy?

The life insurance grace period typically ranges from 30 to 31 days — though some insurers are more generous. During this time, your coverage stays in force.

What happens if I don’t make a payment within my policy’s grace period?

If you fail to make a payment within that timeframe, your provider will cancel your policy. This means you’ll no longer have coverage, and your beneficiaries won’t receive a death benefit if you die.

It may have consequences later down the line, too. If you decide to take out a new policy, you run the risk of being denied coverage or charged higher premiums — especially if your health has declined.

Is there anything I can do if my policy lapses?

You might be able to reinstate your policy. Generally, providers will reinstate coverage within a certain amount of time after a lapse, like within 120 days, without the need for any additional paperwork. After that period of time, you’ll most likely have to start from scratch and go through the underwriting process again.

If you want to reinstate your policy, follow these steps:

  1. Ask your insurer for a reinstatement application. It will likely be a simplified version of the original application you filled out when you purchased the policy.
  2. Complete the form and document any health changes. Remember, life insurance is a legally binding contract, so be upfront.
  3. Schedule a medical exam, if applicable.
  4. Once your reinstatement is approved, you’ll need to pay the premiums due from the end of the grace period, plus your new premium and any other reinstatement fees. Generally, your provider will require you to pay your premium in full.

Most insurers will give you up to 2 years to reinstate your policy after a lapse.

How to mitigate missing payments

When you miss a payment, you’re putting your policy at risk. Avoid skipping a payment with these strategies:

  • Set it and forget it. Most life insurance companies will allow you to set up automatic payments from your chequing account every month or year.
  • Pay your premium annually instead of monthly. It’s easier to keep track of one payment than twelve.
  • Dip into your policy’s cash value. If you have a permanent policy, you might be able to use any accumulated cash value to cover your premiums. Keep in mind that tapping into the cash value reduces the usable amount.
  • Make use of a policy rider. Are you unable to pay your premium due to an unforeseen injury or illness? If you opted into a waiver of premium rider, it may be able to step in until you return to work.
  • Assign someone to receive late payment notices. Arrange to send late notices to your account or a trusted friend or family member. They can then remind you to pay your premium before the due date.

What are my options if I can no longer pay my premiums?

If you’ve done the math and can’t afford your policy anymore, you have options.

  • Let the policy lapse. Explore other solutions to meet your financial needs. For example, if you simply want to leave your beneficiaries the cash to cover your funeral expenses, you could open a high-interest savings account.
  • Surrender your policy. If you have permanent life insurance that’s built up cash value, you can surrender your policy and receive the cash value. You likely won’t get a refund on the premiums you’ve paid, though.
  • Research new policies. Find a policy that better suits your budget and needs by comparing providers, policy features and premiums.

Cancelling your life insurance policy

Compare life insurance companies

If you decide to cancel your policy after the grace period in order to find one that better fits your budget or changing needs, than check out the options in the table below.

Name Product Types of Insurance Coverage Range Issue Ages Medical Exam Required Province Availability
PolicyMe Life Insurance
Term Life
$100,000 - $10,000,000
18 - 75 years old
No
Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan
Get fast and affordable term life insurance without the need for a medical exam with PolicyMe.
TermLite Term Life Insurance
Term Life
$10,000 - $1,000,000
18 - 80 years old
No
All of Canada
Get fast and easy-to-understand term life insurance with no medical exam and no paperwork required.
Sun Life Go Term Life Insurance
Term Life
$100,000 - $1,000,000
18 - 69 years old
No
All of Canada
Sun Life Go Term Life Insurance is a standard term life insurance option that guarantees your premiums in the first 10 or 20 years of your policy.
RBC Life Insurance
Term Life
$50,000 - $25,000,000
18 - 75 years old
No
Ontario, Alberta and Manitoba
Select from two unique RBC term life insurance plans to get flexible and affordable coverage that suits your lifestyle and budget. Get a free quote through PolicyAdvisor.
PolicyAdvisor
Whole Life, Term Life, Universal, No Medical
$25,000 - $5,000,000
18 - 75 years old
No
Alberta, Manitoba, Ontario
PolicyAdvisor is a digital life insurance brokerage that has partnerships with 20 insurers in Canada.
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Compare up to 4 providers

Bottom line

Life insurance companies will give you about a month to make up a missed payment. If you don’t pay up, your policy will lapse. Depending on your provider, you might be able to reinstate your policy, but you’ll want to do it as soon as possible to avoid paying extra.

If you’re having trouble paying your premiums, search for life insurance companies with lower rates.

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