Explained by an Expert: Grace Period on a Life Insurance Policy

Posted on October 22, 2019 and updated October 22, 2019 in Life Insurance Canada News 2 min read

We received a question asking what the grace period on a life insurance policy is. Generally, the grace period applies if you miss a payment and you want to make sure the policy doesn’t lapse. That’s where the grace period kicks in. If you had an annual premium on a policy—let’s say it was $700 a year, or whatever the annual premium was—and the payment wasn’t sent in, the insurance company will generally give a 31-day grace period. That could be different, so you always want to make sure you check your policy, but what that means is that, if something happens to the person during that 31 days, the policy would still be in effect. Now, some policies have a cash surrender value, which could extend that even further. You could take that cash surrender value and use it to pay any outstanding premiums—but this is something you are going to want to make sure you check inside your policy. Make sure that you understand how the policy works, and if you’re not sure, ask your agent, ask your broker—and make sure you get that response in writing.

 

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