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Life insurance premiums and the coronavirus
What are my options if I can’t pay my life insurance premium because of the coronavirus?
Typically, life insurance policies expire if you don’t pay your premium within the grace period, which lasts about a month. But with the onset of the coronavirus, many state insurance departments are instructing insurers to extend the deadline or offer flexible payment plans to help policyholders.
What if I can’t pay my life insurance premium on time?
Your insurer is legally required to give you a grace period to make up a missed payment without penalty. The length of the grace period usually ranges from 28 to 31 days — though some insurers are more generous.
During the grace period, your policy stays in effect — which means your beneficiaries would get the death benefit if you passed away, even if your payment was a little late.
What happens if I don’t make a payment within the grace period?
In normal circumstances, your policy would lapse — leaving you without life insurance coverage.
However, life insurance companies are governed by state insurance departments. Many states have issued guidelines to help policyholders who are struggling to pay their premiums during the coronavirus outbreak.
This means that if you can’t make a payment within the grace period, your policy might stay in force.
Other ways to pay your premium
If you don’t have the cash on hand, here are some other ways to pay your premium:
- Use a rider, if you purchased one with your policy. If you can’t work due to an injury or illness — like the coronavirus — a waiver of premium rider could step in to cover your premiums. And if you’re temporarily disabled, a disability rider might apply.
- Withdraw from your permanent policy’s cash value. If your permanent policy has accumulated enough cash value, you may be able to dip into that to pay your premium.
- Make the most of your dividends. Many mutual life insurance companies pay dividends to their permanent policyholders. If you’ve received dividends, consider using the money to cover your premium.
Guidance from state insurance departments about life insurance premiums
Finder contacted each state insurance department on March 20, 2020. The table below contains bulletins and directives from each state’s insurance commissioner. We’ll update it as we receive more replies, and as the guidance evolves.
|State||Date of notice||Directives about life insurance premiums|
|Alabama||No guidance specific to life insurance yet.|
|Alaska||March 18, 2020||“The Alaska Division of Insurance (DOI) prohibits carriers from terminating insurance contracts due to nonpayment. This effort will provide relief to affected policyholders by allowing continuing insurance coverage. In conjunction with this effort, the DOI will work with carriers to minimize the regulatory effects of such an extension, specifically financial review requirements.|
The extension of the grace period does not eliminate the obligation to pay the premium, but limits policy cancellation for late payment. Carriers are encouraged to work with policyholders in the collection of premiums and to waive all late fees.
This bulletin remains in effect until June 1, 2020.”
|Arizona||April 16, 2020||“We encourage all insurers to work with their insured during this time so that coverage continues, policies do not lapse, and claimants have adequate time to fulfill requirements to obtain coverage/claim payment and urge insurers to consider other types of relief.”|
|Arkansas||March 20, 2020||“To assist citizens who may struggle to overcome obstacles during this health emergency, the Department is hereby issuing a sixty (60) day moratorium on the cancellation/non-renewal of insurance policies for the non-payment of premiums for Arkansans diagnosed with/positively tested for COVID-19.|
This moratorium shall apply to all insurance policies issued in this state.
This moratorium extension is not automatic. To be eligible for the 60-day moratorium, affected policyholders must request this extension from their insurance carriers. Insurance carriers may request evidence of diagnosis. The 60-day moratorium period, where requested by the policyholder, is effective starting from the date of issuance of Executive Order 20-03.
Policyholders are advised that this moratorium is not a waiver; it is only an extension or grace period in which to pay premiums. Insurers are directed to work with affected policyholders in paying the premiums that become due during the moratorium period by either allowing a payment plan or a further extension of the due date for the amount in full.”
|California||June 25, 2020||“Insurance Commissioner Ricardo Lara today issued a Notice requesting that all insurance companies provide their policyholders with at least a 60-day grace period to pay insurance premiums.|
The Commissioner made the request to ensure policies are not cancelled for nonpayment of premium due to the novel coronavirus (COVID-19) public health emergency.”
|Connecticut||March 24, 2020||“In Bulletin IC-40 released today, the Connecticut Insurance Department is requesting that all admitted and non-admitted insurance companies that offer any insurance coverage in Connecticut — including, life, health, auto, property, casualty and other types of insurance —immediately provide consumers with at least a 60-day grace period without interest or penalty to pay their insurance premiums.|
Institutions that receive regular payments from insurance companies are encouraged to offer insurance companies the same forbearance those companies are offering their consumers.”
|Delaware||July 2, 2020||“The moratorium on the cancellation or nonrenewal of policies that had been in an effect under the Sixth and Ninth Modifications to the Governor’s declarationss of a State of Emergency has been lifted and, insurers must grant policyholders suffering a Covid-19 related hardship an extension of time for the repayment of the premium which was past due between March 25, 2020 through July 1 2020 without penalty or interest.”|
|District of Columbia||No guidance specific to life insurance yet.|
|Florida||March 25, 2020||As part of the state’s ongoing efforts to minimize the spread of COVID-19, the Centers for|
Disease Control and Prevention and the State of Florida have advised individuals to adopt farreaching social distancing measures, such as working from home and avoiding gatherings of
more than 10 people. This could cause workers in many industries to be displaced for a period of
time. As a result, regulated entities are encouraged, when prudently possible, to be flexible with
premium payments in order to avoid a lapse in coverage. Such flexibility can include:
|Kansas||No guidance specific to life insurance yet.|
|Kentucky||April 24, 2020|
|Louisiana||No guidance specific to life insurance yet.|
|Maryland||March 20, 2020||“In light of these difficult circumstances, I encourage all Life/Health Carriers and Property and Casualty Insurers doing business in the State to make reasonable accommodations so that individuals and businesses do not lose coverage due to nonpayment of premium during this emergency.|
Reasonable accommodations may include suspension of premiums due, extension of billing due dates and premium grace periods, and waiver of installment and late payment fees.
Insurers should take steps to encourage policyholders to use electronic payment technology on websites, apps and electronic bank transfers whenever possible.
This Bulletin applies to both personal and commercial lines of property and casualty insurance and all lines of life and health insurance.”
|Massachusetts||March 23, 2020||“All carriers (whether issuing property and casualty, life and annuity, or health products) are advised to provide employers and individuals with as much flexibility as is reasonably possible during the period of the COVID-19 public health crisis to maintain their existing coverage, despite policyholders’ growing concerns about being able to send their premiums in on time.|
Carriers should explore all possible ways to relax due dates for premium payments; to extend grace periods; waive late fees; non-sufficient funds fees; installments fees and penalties; allow payment plans for premium payments; assist affected policyholders to find ways that insurance policies do not lapse; and consider cancellation or nonrenewal of policies only after exhausting other efforts to work with policyholders to continue coverage.”
|Michigan||April 13, 2020||The Director strongly encourages insurers to provide their insureds with at least a 60-day grace period to pay insurance premiums so that insurance policies are not cancelled for nonpayment of premium. Insurers may effectuate this directive by offering payment accommodations, such as allowing consumers to defer payments (without incurring interest), extending payment due dates, and/or waiving late or reinstatement fees. DIFS encourages insurers to allow for payment plans for the backdue premium at the end of an insured’s 60-day grace period, in lieu of a balloon-type premium bill. Furthermore, automobile and home insurers offering insurance under the Essential Insurance Act should consider allowing flexibility related to eligibility determinations related to non-payment of premium.|
|Mississippi||April 1, 2020||Insurers may issue cancellation/non-renewal notices for non-payment of premiums during the sixty (60) day moratorium period. When such notices are issued during the sixty-day moratorium, notice periods required by the statute or the policy may begin to run, but in no event may a cancellation/non-renewal for non-payment be effective until after sixty-day moratorium expires.|
|Missouri||May 7, 2020||All insurers, including health carriers, are strongly encouraged to extend grace periods until June 15, 2020.|
|Montana||March 26, 2020||Flexible payment solutions for families, individuals and businesses; providing additional time to make payments; allowing grace periods to delay premium payments|
|Nebraska||No guidance specific to life insurance yet.|
|Nevada||Email from March 26, 2020||“As of today, the Division has not issued any guidelines to any carriers regarding premium payments. However, this health crisis is ever evolving and the Division is exploring all options available and is working with carriers to determine what is the best course of action to take to help consumers during this difficult time.”|
|New Hampshire||“As of today, the Division has not issued any guidelines to any carriers regarding premium payments. However, this health crisis is ever evolving and the Division is exploring all options available and is working with carriers to determine what is the best course of action to take to help consumers during this difficult time.”|
|New Jersey||April 10, 2020||Insurers are directed to:|
|New Mexico||March 20, 2020||“In response to the disruption caused by the outbreak, I am requesting that all insurance companies refrain from cancelling or non-renewing policies of businesses and individuals negatively impacted by the disruption due to the nonpayment of premiums during this public health emergency, or at a minimum, provide extended grace periods for payment of premiums.|
We encourage implementing these practices as soon as possible and consider extending them for a minimum of thirty (30) days after the emergency is declared over.
I also request that all insurance companies work with their insureds after the public health emergency is over to allow the insureds to catch up on past due premiums in installments without loss of coverage. “Balloon” payments are likely to be unaffordable. Economic distress and loss of income in these times are due to circumstances beyond the control of the insureds.”
|North Carolina||April 21, 2020||“NCGS 58-2-46 provides the specifics pertaining to extensions, deferrals, and other extra requirements|
applicable to the entities as referenced therein. Such entities are required to provide their customers
adversely affected in the disaster area specific relief of the insureds’ payment, submission of claims
and other responsibilities. You are encouraged to review the statutory requirements for proper
|North Dakota||March 30, 2020||“[The] North Dakota Insurance Department issues this Bulletin to urge all North Dakota insurers… to provide flexibility and possible relief from certain insurance requirements to those North Dakota consumers and businesses that have been impacted by the COVID-19 pandemic.|
The relief may include, but is not limited to, the following:
|Ohio||March 30, 2020||the Superintendent hereby orders Insurers to provide their insureds with at least a 60-day grace period to pay insurance premiums so that insurance policies are not cancelled for nonpayment of premium during the state of emergency. This means Insurers should offer payment accommodations, such as allowing consumers to defer payments at no cost, extending payment due dates, or waiving late or reinstatement fees, where consumers are unable to make timely payments of premium or fees due to COVID-19-related disruptions.|
|Oklahoma||June 18, 2020||Emergency orders have been issued for several types of insurance. The orders require insurance companies to provide a minimum one-time grace period to their customers for each insurance policy. Companies can provide longer grace periods and coverage windows if they want. Minimum length of grace periods and length of time claims that will be paid during the grace period|
is 90 days.
|Oregon||March 25, 2020||Emergency orders have been issued for several types of insurance. The orders require insurance companies to provide a minimum one-time grace period to their customers for each insurance policy. Companies can provide longer grace periods and coverage windows if they want. Minimum length of grace periods and length of time claims that will be paid during the grace period is 90 days.|
|Pennsylvania||March 19, 2020||“The notice was issued to department-regulated insurance companies to encourage flexibility for displaced Pennsylvanians who are no longer receiving regular salaries due to the outbreak mitigation efforts, thereby adversely affecting their ability to make timely payments for monetary obligations, including payments for insurance premiums.|
Suggested assistance includes relaxing due dates for premiums payments, extending grace periods, waiving late fees and penalties, allowing payment plans for premiums payments, assisting affected policyholders to ensure that their insurance policies do not lapse, and a willingness to consider cancellation or non-renewal of policies only after exhausting other efforts to work with policyholders to continue coverage.”
|Rhode Island||March 25, 2020||The Rhode Island Insurance Division requests that insurers writing business in our state take the following steps to preserve access to insurance coverage during this emergency:|
|South Dakota||No guidance specific to life insurance yet.|
|Texas||March 23, 2020||TDI expects all carriers to work with policyholders who may experience financial hardships due to the COVID-19 outbreak. TDI encourages carriers to use grace periods for payments, temporary suspension of premium payments, payment plans, and other actions to allow continuing insurance coverage as appropriate. TDI will work with carriers to minimize the regulatory effects of an insurer’s actions to provide policyholder relief, specifically for financial review requirements. The term “suspension” is not intended to mean the forgiveness of the premium.|
|Utah||No guidance specific to life insurance yet.|
|Vermont||No guidance specific to life insurance yet.|
|Virginia||March 13, 2020||It is further ORDERED that insurers and other regulated entities shall continue to adjust claims as expeditiously as possible during this insurance emergency, and shall utilize all possible methods of adjusting claims remotely, such as telephone, email, facsimile, mobile applications, satellite imagery or 3D mapping, all the while striving to meet normal time framesfor the adjustment and resolution of claims whenever possible. The Commissioner recognizes that some claims must be adjusted in person and that strict adherence to normal time frames may be impractical in those certain circumstances and others related to staffing and social distancing because of the COVID-19 crisis. Insurers should prioritize claims adjustment and resolution strategies during this insurance emergency to ensure that high priority claims are addressed before lower priority claims.|
|Washington||No guidance specific to life insurance yet.|
|Wisconsin||March 20, 2020||“Insurers are encouraged to offer flexibility to insureds who are incurring economic hardship. This flexibility can include offering non-cancellation periods, deferred premium payments, premium holidays, and acceleration or waiver of underwriting requirements.”|
|Wyoming||Email from March 24, 2020||“At this time, Commissioner Rude will not mandate insurance companies to make policy or billing exceptions related to COVID-19. However, the Commissioner strongly encourages insurance companies to provide reasonable accommodations to policyholders that have been directly impacted by COVID-19.|
If a Wyoming consumer is faced with losing insurance coverage as a result of being directly affected by COVID-19, they are encouraged to contact the Department so a formal investigation can be conducted.”
What should I do if my state hasn’t issued a directive?
Try to contact your life insurance company as soon as you know you can’t pay your premium. Many carriers — like State Farm, Allstate and USAA — are offering flexible payment plans and other concessions in response to the coronavirus. And to offset high call volumes, most insurers have set up dedicated pages explaining how customers can get payment help during the COVID-19 outbreak.
When you reach out to your insurer, explain your financial situation — including how much of the premium you can afford to pay, or when you’ll be able to restart payments.
The coronavirus is affecting the lives of millions of Americans, and your insurer may offer you a longer deadline or flexible payment plan based on your case.
Is there anything I can do if my policy lapses?
Most insurers will reinstate your policy within 30 days without the need for any additional paperwork.
Once you’re in a better financial situation, you can take these steps:
- Ask your insurer for a reinstatement application.
- Fill out the form, and be transparent about any changes in your health and lifestyle since your original application.
- Schedule a medical exam, if applicable.
If your insurer approves the reinstatement request, you’ll need to pay the premiums due from the end of the grace period, plus your new premium in full.
But if you wait more than 30 days, you’ll likely have to go through the underwriting process again to get reinstated, or apply for a new policy.
Premium relief offered by life insurance companies
Here’s how some of the major insurers across the US are treating premium payments during the coronavirus outbreak.
|Insurer||Relief offered||Contact details|
|Guardian||Use the live chat function, or email Direct_Support@glic.com.|
|John Hancock||Call 1-800-732-5543.|
|Lincoln Financial||Call your insurance advisor. Otherwise, reach out to the life insurance department on 1-800-487-1485.|
|MassMutual||Call 1-800-272-2216 to discuss your payment options.|
|Nationwide||Call a life insurance advisor on 1-800-32-6064.|
|New York Life||Call your local agent, or customer care on 1-800-225-5695.|
|Northwestern Mutual||Call your financial advisor for the most tailored advice. Otherwise, you can call customer care on 1-866-950-4644.|
|Pacific Life||Call your local representative, or the life insurance department on 1-800-347-7787.|
|Primerica||Call 1-800-257-4725 or email CoronaQuestions@Primerica.com.|
|Protective Life||Call 1-800-866-9933 or email email@example.com.|
|Prudential||Call 1-800-556-8527 to discuss your options if you’re facing financial hardship.|
|State Farm||Call your local agent, or the billing department on 1-800-440-0998.|
If you’re struggling to pay your life insurance premium, reach out to your insurer or look to your state insurance department — they may have guidelines in place to help you.
The news is evolving every day, so stay on top of changing information about the coronavirus.
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