An extended grace period is being offered to all customers just like other insurance. You can drop the coverage without having any immediate troubles because life insurance does not require loan contracts or regulators.
If due to the COVID-19 you are not able to pay your life insurance packages but want to keep the coverage it will differ and only depend on whether or not you are subscribed to a term or permanent insurance.
You are likely to lose the coverage if you are on term insurance after the grace period elapses. On the other hand, you will have more options if you have permanent insurance.
For example, many whole-life policies have built-in options to pay your premium in other ways. For one, the insurer may be able to use some of the cash value of the policy, Jon Voegele, board chair of Life Happens, an educational nonprofit supported by insurers and brokers, said in an email.
Your death benefit will go drastically down if you use your policy’s cash benefit. In some instances, your beneficiaries will be left with very little or nothing at all if you take out too much of your cash benefit after you die.
Below, we have educated you on some ways to lower the cost of your life insurance premium during this COVID-19:
Try to make use of dividends: In recent times, a lot of insurance companies are offering permanent policies that have got a payment option of dividends. As smart as you can be, use it to pay your insurance premiums.
Slash down your death benefit: You will obtain some form of coverage with this when on the permanent premium. It is not the best option yet, your beneficiaries will be left with a couple of cash when you die.
Change to term life: Some insurance companies allow you to cash out your permanent policy and use part of the capital to purchase life insurance instead.
Term life only provides benefits when you die during the policy term although it is cheaper.