Insurance policies last for a term usually one year at a time and then renewed. If not renewed in advance, the benefits under the cover lapse barely a minute after the term expires.
As important as auto, health, and life insurance covers are to our individual relief, most times, people forget or consciously delay policy renewal. This delay has consequences and here are the effects of late insurance policy renewal.
Missed premium installments
If this is the first time you are delaying your monthly premium installments, the insurance company can extend a few days grace period without penalty. The grace period is discretionary and one must get in touch with the broker or the company to know how many such days are allowable.
If you need this grace period for some reason, get it now to avoid penalties. At some point, the insurance company will start charging a daily fee for every day the installments remain unpaid or slap you with a hefty surcharge.
Increased risk level
Erratic installment payments increase the chances of getting a high-risk client label and this has negative connotations. Unpaid installments can also find their way onto your credit score with a negative impact.
Never fall back on premium installments because that could mean the beginning of very tough times ahead as missed payments remain on record for up to ten years. It also means a possible increase in your premium at the next policy renewal or, at worst, a rejection.
Possibility of policy cancellation
This is one possibility that should not happen at all costs because it can be disruptive to a family’s life. Auto insurance is compulsory and the penalties for driving without insurance cover are severe.
You do not want to risk cancellation of your car insurance cover over delayed installments because using it becomes illegal and can subject you to hefty fines that range from $5,000 to $25,000 enough to buy a new car! This is in addition to the inconvenience caused to the family mobility.
Loss of protection
In the event of insurance policy, cancellation or renewal rejected, it becomes near impossible to get another provider to sign you on. The consequences of this loss are grave indeed since missed payments remain on record for ten years.
It simply means that you resort to public transport and lose the convenience of personal mobility. Once you attach plates, driving without valid insurance in even worse due to the hefty fines that can only get worse should you cause an accident.
Avoid missed installments
Missing or delaying an installment is expensive and one can avoid the unnecessary cost by a little planning. If you have a checking account, schedule automatic remittances to the insurance company and you will never have to worry about inadvertently forgotten payments.
Another option is to arrange with the company for text or email reminders in a good time before the due date for easier planning. Preempt any situation that can lead to delayed payments to avoid facing policy cancellation.
Insurance policies are necessary and we need to take various policies for personal and property covers. However, these operate on contractual terms and one must strictly observe these to secure their benefits.
Whereas in life insurance, lapsed policy terms can be cured and allowing one to withdraw their money, the same is not possible for health covers, which suffer total redundancy after the allowable grace period. Take care that your policy covers are updated at all times.