Life Assurance Premium

The dangers of not keeping premiums up to date, and how to ensure you’re protected.

Just like car insurance, if you don’t pay your life assurance premium, sooner or later your cover will be declared void- and reinstating cover often requires a repeat medical examination. Instead, consider a premium protection or waiver scheme when you take out the policy- insurers need little incentive to try not to pay up!

What would happen if you took out a policy, and didn’t pay the life assurance premium? It actually depends upon the type of policy you own. Unless you have an endowment or whole of life policy, which contains an investment element, you are very unlikely to receive a return of any premiums you have paid. Even if you do have these types of policy, you won’t get anything like a full refund (and with some companies you won’t get anything back). Even so, don’t assume that you won’t- a dead policy needn’t be a complete dead loss. Term assurance policies don’t have additional value, and you can almost certainly kiss your life assurance premium rebate goodbye.

You should instead consider some sort of premium protection or waiver opportunity; both of which (in different ways) will protect your life assurance premium payments should you, for example, be unable to work. It can be an awful lot of money wasted if your policy expires due to non-payment. By the way, it usually takes a few months for policies to expire for non-payment: the life companies will go some way to accommodating you, as after all, they don’t want to lose your business. However if you die during a period when your life assurance premium record is disastrous, they will equally try to wriggle out of paying up.

There is one further disadvantage to failing to pay your life insurance premium. If in the future, you wanted to reinstate the policy; then a new medical examination would normally be required by the life company before new cover could be offered.
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