Are you always looking for ways to save money? We get it! Trimming out unnecessary bills can mean more cash in your pocket to spend on the things you want.
However, there are definitely bills that you should not stop paying in order to gain extra cash…your mortgage/rent, utilities and supplemental insurance premiums, to name a few! Let’s learn about what happens if you stop paying your supplemental insurance premiums and how it could impact your family’s financial security and future.
What happens if I stop paying my supplemental insurance premiums?
When you own a supplemental health or life insurance policy, you pay a regular premium to keep the policy active. If you stop paying premiums, your policy will lapse, which means you lose your coverage.
Most insurers understand situations can arise that result in late payment—misplaced and forgotten bills happen to the best of us! Rest assured, your policy won’t be canceled just because it’s a little late. If your insurer doesn’t receive your premium payment by the due date, your policy will enter its grace period, which allows your policy to stay in force and gives you some extra time to make a late payment. You may receive a reminder about your premium payment that lets you know how long your grace period is. Please reach out to your agent during this time if you have any questions!
If your grace period ends and your insurer still hasn’t received your premium payment, your policy will unfortunately lapse and you’ll lose your coverage.
Let’s cover four reasons why you shouldn’t let this happen!
1. You lose out on your policy’s financial protection
No one can predict the future and foresee when critical illness, accidental injury or loss of life will occur. If you break your arm the day after your supplemental health insurance policy lapses, you could miss out on hundreds or thousands of dollars in benefits that could help you pay for medical bills or living expenses. And if you pass away without the financial protection of life insurance, your family could be responsible for your final expenses and debts without a death benefit to help.
Typically, these unfortunate events happen when we least expect it, which is why it’s good to always be prepared.
2. Your premiums will probably go up
Let’s say you let your supplemental health or life insurance policy lapse, but then change your mind a year later and decide you want coverage again. You may be surprised to find out that your premiums have risen from when you first got coverage. That’s because premiums tend to increase with age—and you’ll never be younger than you were when you first secured coverage! You could also develop a pre-existing condition that may affect your ability to get coverage or raise your premiums significantly.
3. You may have options for enhancing your coverage
Are you canceling your policy because it no longer meets your needs or you want more coverage? Before letting your coverage lapse, talk to your insurance agent about the possibility of a policy upgrade. You may be able to change your policy or add to it to get the coverage and benefits that you want.
If an upgrade isn’t possible, your agent may be able to recommend a different product that better meets your needs. Your agent can help you develop a plan to avoid a period of time with coverage gaps.
4. There could be other ways to save money
Supplemental insurance is far more affordable than most people think. The premiums vary by plan and carrier, but the average cost compares with nonessential items like coffee, restaurant meals, streaming services and cigarettes:
- $416: Two lattes a week for one year
- $832: Two fast-food meals a week for one year
- $780: Digital TV streaming for one year
- $2,190: A pack of cigarettes a day for one year
Cutting back on nonessentials may help free up money for the financial security and peace of mind that supplemental insurance can help provide.
We’re here for you!
If you’re thinking about canceling your supplemental insurance policy or letting it lapse, we encourage you to first talk to your insurance agent. Your agent may be able to help you find a solution that better meets your needs. Also reach out to your agent if your policy has recently lapsed as a reinstatement of coverage may be possible.