Here's What Happens When You Miss a Life Insurance Payment

Life insurance is important to have when there are people in your life who depend on you financially. But as you're probably aware, it's not a free service.

If you stop paying your mortgage loan, your lender will eventually have the right to foreclose on your home. If you stop making car payments, your auto loan lender can eventually seek to repossess your car.

Similarly, if you stop making life insurance premium payments, your coverage will end up lapsing. But that won't necessarily happen if you miss a single payment. In fact, the consequences of missing a payment will depend on the type of policy you have.

When you have term life insurance

Term life insurance covers you for a preset period of time and does not accumulate a cash value. If you miss a term life insurance payment, you might risk having your policy lapse.

That said, many life insurance companies offer a 30-day grace period for missed payments before your policy is canceled, says Experian. So if you miss a payment but are able to make it a bit late, your policy isn't necessarily done with.

When you have whole life insurance

Whole life insurance, unlike term life insurance, does accumulate a cash value. And if you've accrued enough of a cash value to cover the cost of the premium payment you didn't make, then your policy may be safe. But if you stop making your payments altogether, your coverage might lapse eventually.

What to do if you're struggling to afford your life insurance premiums

If you're at risk of missing a premium payment because your life insurance is something you can no longer afford, don't just resign yourself to not having coverage. Instead, explore your options for securing coverage that's more affordable for you.

If you have whole life insurance, for example, replacing it with term life insurance could be a far more affordable option. And this way, your loved ones are still protected.

Of course, the amount you'll pay for life insurance will hinge on factors such as your age, health, and habits. For example, if you smoke, you can generally expect to pay more for life insurance than a non-smoker, all other things being equal.

But Forbes says that the average cost of a $500,000 life insurance policy for a 30-year-old, non-smoking man is about 5.8 times more expensive for whole life insurance than a 40-year term life policy. For a 30-year-old female, whole life insurance would be about 6.7 times more expensive in this situation.

You'll need to do some rate shopping to see what costs you're looking at yourself. But don't automatically give up on life insurance coverage completely when your premiums become financially burdensome.

In addition to changing the type of coverage you have, you can also look at buying less coverage -- for example, getting a $250,000 policy instead of one for $500,000. Protecting your loved ones to some degree is better than not having insurance at all.