Term insurance is a unilateral agreement (an agreement where the offeror promises to pay the person taking the policy after the completion of a certain act) between the policyholder and the insurance company. The burden solely lies only on the insurance company, and the policyholder is not under any obligation to pay the premium, unlike a credit card repayment or a bank loan.
If you do not pay a term insurance premium, there will be no legal action taken against you. However, the policy that you took will simply get lapsed. However, you do not need to fret if you unintentionally miss the payment day or if some inevitable reasons have prevented you from making the payment of premium because when requested upon, the insurer can provide you with some options.
What happens if you accidentally miss a payment?
If any person accidentally misses the payment date then, term insurance companies provide a grace period for remitting the premium payment. Usually, the duration of this grace period is 30 days. If you make payment within these 30 days, your policy will not get lapsed.
However, it is essential to note that every insurance company has distinct terms and conditions regarding the duration of the grace period. You must always keep in mind that the policy cover does not get stopped during the grace period. That means if any person departs during the grace period, the nominees of the demised person will receive the benefits.
Hence, it is advised that you make timely payment of your term insurance premiums.