Reader’s Question:

Hi, I have bought permanent life insurance here in Cape Coral for about ten years now. But at this point I can’t pay for the premium anymore because of an unexpected event in our family. What should I do with my insurance here in Cape Coral?

Claire

Cape Coral FL

Hi there Claire.

I appreciate your honesty and surely you will be rewarded with solutions to your crisis. With permanent life insurance, you will be faced with three options if you cannot pay for the premium anymore. First, you can opt to cash out the cash value of your policy. This way, you will be able to collect the accumulated cash. Once you do this, you will not longer be entitled for the life insurance coverage but at least you have taken out the cash savings. It is possible for you to pay taxes if the amount is over what you have paid in premiums.

Your second option is reduced paid up. This means that you can choose to stop paying while you let the cash value pay for the life insurance. Once this happens though, the death benefit may be reduced and there would be no more cash value.

You can opt to have it lapsed. However, you can save it in due time if there is provision in the policy that it can be reinstated after a period, usually after five years. Once you reinstate it at times when you are already ready to keep the life insurance “alive” again, you need to pass through another medical examination. However, the premiums are usually lower compared when you buy it as new life insurance.

You can talk to your life insurance agent to guide you with the best choice taking into account all the possibilities in your current and future condition.