Perhaps — it depends on your form of coverage. Simply put, there are limited conditions when you can get money back from a lapsed life insurance policy.
Term Life Insurance
If you have term life insurance, your options are limited. The policy will lapse, and future payments will not restart coverage. If you would like to “reinstate” your policy, you must contact your insurance provider. Generally, companies require you to fill out another application and let them know if your health has changed. Additionally, your insurance company may require a new medical exam before reinstating your policy, depending on how long it has been since the “grace period” ended.
Upon reinstating your policy, you will have to retroactively pay the premiums for the time your coverage was lapsed. This means that the longer you wait after your coverage lapses, the more premiums you will have to pay before you reinstate your previous policy.
Permanent Life Insurance
Permanent life insurance is more expensive than term life insurance, but it is also more forgiving of nonpayment. As with term life insurance, one option is to “reinstate” your previous policy by reapplying and retroactively paying the premiums you missed. If you cannot pay the required amount for reinstatement, however, there are other choices available.
Many permanent life insurance policies combine a “death benefit” (i.e. how much the beneficiary gets paid if/when the owner dies), as well as a “cash value.” This cash value functions as a savings investment separate from the death benefit. In this case, you may have the option to “cash out” your life insurance by withdrawing the policy’s cash value (i.e. its accumulated savings) when your death benefit coverage lapses.
Lapsed Policy Refund
Some insurance policies include a nonforfeiture clause, which means that if you stop paying premiums, you still receive some sort of benefit. You can think of this as a lapsed policy refund. If your coverage lapses, the insurance company will refund part of your premium payments and/or pay you the policy’s cash value. With some policies, your coverage will not lapse in case of nonpayment; instead, your policy will remain in place but with a reduced death benefit calculated as a percentage of your paid premiums.
Talk with an Experienced Life Insurance Lawyer
We have experience in every state in the nation, as well as with working under federal ERISA law, helping life insurance beneficiaries and those who are otherwise entitled to some of the death benefits get their due. Let us help you too.