September 10th, 2006 | 
Author: 
Nancy asked:
So I have had a term life insurance for eight years and three months ago my house was robed and my purse went missing. I canceled a lot of bank accounts and opened new ones. my life insurance was one payment that was deducted automatically. well since I canceled my account the payment was not honored for two months. now that I called my insurance company they tell me my policy lapsed and I cannot pay the backed up amounts and continue my policy. Now they want me to get a new one and start all over again. what can I do can they really do that or what are my options???? help it gets expensive since I am older now.
Deloras Buboltz
So I have had a term life insurance for eight years and three months ago my house was robed and my purse went missing. I canceled a lot of bank accounts and opened new ones. my life insurance was one payment that was deducted automatically. well since I canceled my account the payment was not honored for two months. now that I called my insurance company they tell me my policy lapsed and I cannot pay the backed up amounts and continue my policy. Now they want me to get a new one and start all over again. what can I do can they really do that or what are my options???? help it gets expensive since I am older now.
Deloras Buboltz
Posted in Insurance | 
Tags: Bank Accounts, Insurance, Insurance Company, Life Insurance Policy, Lot, Options, Purse, Term Insurance, Term Life Insurance, Term Life Insurance Policy, Three Months
Yep, the company can do this. That’s the difference between term and permanent life insurance. You let the policy lapse for two months, so now you have to buy a new one. You should have taken care of this sooner, but hind sight is always 20/20.
Nancy, do you know that only 3% of term policies are ever paid?
There are many different types of term policies available, but you are usually able to reinstate your policy for a term stated in your policy contract. You may need to prove your insurability with the company, but that really shouldn’t be a problem.
If you are able to, you should really look at a permanent policy, or a blend of permanent and term insurance so you are building some cash value while still maintaining a death benefit.
Good luck!
Can they do that? Yes – you stopped paying the premium and they don’t care why. Your option is to buy a new policy.
Unfortunately once your policy lapses there’s nothing really you can do, although you should of recieved a warning letter. But I don’t recommend buying term insurance anyways since 99% of term policies don’t get paid out. You will always need life insurance if you are married and/or with children. Even if you’re financially sound, insurance money is a great way to hedge against estate taxes in the future, so I recommend getting an Universal life policy where they build cash value. If done properly you will have insurance coverage for life and if you miss any payments, it will deduct from your cash value to prevent from lapsing. I suggest an IUL(index) product and stay away from VUL’s(variable). They can be a way to diversify your retirement fund as well. If you want more info you can msg me. I used to work for a insurance broker
They’ll let you reinstate. Are you asking the insurance company or the agent? That may make all the difference in the answer to your question. Call the insurance company directly. They’d let you reinstate even 3-4 months later subject to some basic underwriting.
The agent may tell you to apply again so they can get paid again.
BELOW ANSWER IS WRONG….(and she doesn’t sell life insurance)…I could have reinstated a policy for a client that had lapsed more than 6 months earlier. The issue was by the time he paid the back premium it didn’t make sense. SO, figure out if it makes sense or just buy a new one. But, don’t just buy a new one because someone says you can’t reinstate because you likely can.
You can’t do anything. You have to reapply for new coverage.
Usually, they send you a letter, if they can’t sweep your account.
Don’t limit yourself to that company, though – use an agent, and get a BUNCH of quotes. If you’re still relatively healthy, you might actually get a price pretty close to what you were paying before. Rates have actually come DOWN.
There’s nothing much else you can do once a policy lapse. You either have to get a new one or don’t get it at all. You may be able to reinstate the policy where you don’t have to go through all the medical stuff again, but the premiums will be adjusted to your current age.
I am sorry your house was burgled. Did the insurance company not send you a letter to tell you that your policy had not been paid. Life insurance policies continue coverage for 30 days after a missed payment. The policy will then lapse. Unfortunately you may have to submit a new policy. I would shop around for an independent insurance broker (one who represents a number of companies). They may be able to help you and find you a better policy. Bare in mind that you may have to reduce the amount of coverage in order to afford the policy. Good Luck!
This is an unfortunate situation, but everything the insurance company has done is legit. The reason they won’t let you just pick up paying your premiums is that people would just pay their premiums when felt they were closer to death and stop once they felt that they were in the clear.
Most term life insurance policies have reinstatement options. You will have to answer some questions and probably go through underwriting again, but you will get to keep your old rates if they are lower than the rates for the new policy. If your health has declined they may choose to not reinstate the policy.
Ask the company or check your policy contract to see if there are any reinstatement options.