Lapsed Life/Critical Illness Insurance Policies

Sometimes when a person’s income reduces, they cancel insurance policies in order to reduce how much they’re spending. Or a person might struggle to keep up the monthly payments.

It’s important to remember that with a cancer diagnosis, or other health issue, it could be harder, or more expensive to get insurance in the future.

Insurance policies might have an extra benefit built in to pay the monthly premium if you are off work due to accident or sickness, called ‘waiver of premium benefit’. So, it might be worth checking for this first before cancelling cover or missing payments.

It may also be possible to agree with the insurance company to reduce the amount insured, but keep some cover. This might reduce the regular payments to a more affordable level. But, remember that it might not be possible to increase the cover again later. There may also be an option to change how often payments need to be made (from annual to monthly for example) to spread the cost.

If someone misses a payment, there will usually be a time limit to pay what’s owed so that the cover doesn’t stop. Typically, this period would be around 30 days, but will depend on the particular insurance company, so it’s important to check this.

If premiums aren’t paid within the time limit and the policy is stopped, the insured person will lose their cover. The insurance company may sometimes consider re starting the cover if only a couple of payments have been missed, but they may want the person to provide evidence of good health and for the missed payments to be paid.