Is it possible to lose your life insurance policy? While it may be something that you have to give you and your family peace of mind, it is possible to lose your life insurance policy. We break down ways in which this can happen and how you can get it fixed.
What can cause your policy to be cancelled
Missed payment. When you enter an agreement with your life insurer, they will inform you when they debit your account. It means you will have to hold up the other end of the agreement by ensuring that there are enough funds to cover your premium. Missing a payment can result in you having your policy being cancelled if your cover is not paid for within the grace period.
Choosing to cancel. You have the option of cancelling your policy. Your insurer will inform you on how you can cancel your policy, but keep in mind that should you want to start a new policy you will be starting from scratch meaning that the 2-year clause will come into effect.
The ‘grace period’
Missing a payment on something as important as life cover means that your claim will not be paid out should anything occur in the upcoming month that you are not covered for.
However, the Policyholder Protection Rules that were introduced in 2004 mean that insurers should give you a grace period when you have missed a payment.
The rule states that insurers should give policyholders a period of grace for the payment of premiums of no less than 15 days. What this means is that you have 15 days to make a payment on your premiums.
What you can do if your policy is cancelled
Checking that your policy is up to date and active can help you catch errors and also help you avoid disappointment for you and your loved ones - especially when you need it the most. You can contact your insurer to have a cancelled policy fixed. Contacting your insurer immediately and doing regular checks to see that all is up to date can help you avoid any surprises when it comes to the claim stage.
Is there a time limit for when you can claim?
Policyholders should aim to keep the list of their beneficiaries up to date to make it easier for insurers to contact the right people who are meant to receive the benefits of their policy. There is no time limit when it comes to placing a claim on a policy. However, it is advisable to get this sorted as soon as possible to avoid miss placing or having a benefit go unclaimed.
