In the context of life insurance and/or living benefits, the “premium due date” refers to the specific date by which the policyholder is required to pay the premium to keep the insurance policy active and in force. Premium payments are essential for maintaining the coverage provided by the policy, which in turn ensures that the benefits promised under the terms of the policy are available when needed.
Key aspects of the premium due date include:
Payment frequency
Insurance policies may offer various payment frequency options, including monthly, quarterly, semi-annually, or annually. The premium due date is determined based on the chosen payment schedule.
Grace period
Life insurance and accident and sickness insurance (which includes disability insurance) have a grace period after the premium due date, during which the policy remains in force even if the payment has not been made. Outside Quebec, the provincial insurance acts set it at no less than 30 days, or longer if the policy allows. In Quebec, the Civil Code gives 30 days for life insurance, and an accident or sickness policy can’t be cancelled for non-payment without 15 days’ written notice. If the premium is paid within the grace period, the policy continues without interruption.
Policy lapse
Failure to pay the premium by the end of the grace period can result in the policy lapsing, meaning the coverage is suspended or terminated. To reinstate a lapsed policy, the policyholder generally has to apply within two years, pay the overdue premiums with interest, and provide evidence of insurability.
Notifications
Insurers usually send reminders or notices to policyholders in advance of the premium due date, as well as notifications if a payment is missed during the grace period, to help prevent unintentional lapses in coverage.
Automatic payments
Many policyholders opt for automatic payments from their bank accounts or credit cards to ensure premiums are paid on time and to avoid the risk of policy lapse due to missed payments.
Impact on benefits
Timely payment of premiums is crucial for ensuring that the insurance coverage is active when a claim is made. For life insurance, this means the death benefit will be paid to beneficiaries upon the insured’s death. For living benefits, such as disability or critical illness insurance, it ensures that the policyholder is eligible for the benefits in case of a qualifying event.