What happens if the premium is not paid after the grace period?

When a policyholder fails to pay their premium after the grace period, the policy generally remains in force under the provision known as the Automatic Premium Loan. This is a feature offered by many life insurance policies where, if the premium is not paid by the end of the grace period, the insurer can automatically borrow the amount needed to cover the missed premium from the policy's cash value. This prevents the policy from lapsing due to non-payment and keeps the coverage active for a certain period.

The Automatic Premium Loan ensures that the policyholder does not lose their coverage immediately after a missed payment, as it uses existing funds from the policy itself. However, it is important to note that if the cash value is exhausted and no premium payment is made, then the policy could still eventually lapse.

This option is designed to provide the policyholder with some flexibility and security, ensuring that their insurance coverage remains in force even if they encounter a temporary financial difficulty.