Your Life Insurance policy remains in effect if you pay the premiums on time. However, if you miss the premium payments and exhaust the cash surrender value on your policy, it will lead to a lapse in coverage. A lapse in coverage means that your insurance will no longer provide coverage or death benefits. The insurance company will not have your policy lapse immediately after you missed your payment. Every company has a grace period where the policy will still provide coverage and death benefits despite the missed payment. After the grace period has passed, the insurer will consider the policy lapsed. After the lapse, the insurance company will have no obligations to the insured or the beneficiaries.
The insured may wish to reinstate the policy shorty after lapse, and different insurance carriers have different rules for reinstatement. If done soon enough, this process may be completed without underwriting. Moreover, reinstating the policy is always less expensive than buying a new policy, so this should be done as soon as possible. Reinstatement, however, costs more than a monthly premium, so it is important to prevent the policy from lapsing in the first place by paying the premiums on time.
If you want to avoid the lapse of the policy, pay your insurance premiums on time. Most insurance carriers will allow you to set up automatic payments every month, where the balance will be deducted from your bank account or credit card. Whole Life and Universal Life policies might take the missed premium from the cash value of the policy, in order to not let the policy lapse, and when the cash value will be reaching zero, they will consider the policy lapsed. Since Term Life Insurance has no cash value, after the premium payment is missed, the policy will go into the grace period and lapse after the grace period is over. Insurance company will always contact you regarding the lapse in your policy, so it is important to check your email for any notifications.
Pay your insurance premiums on time in order to avoid the lapse in your policy and communicate with your insurance provider in case you have any concerns.