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Insurance Grace Periods Explained

Find out what happens to your coverage, claims and reimbursements during the grace period.
Last update:
21st June 2023
Reviewed by a licensed advisor
woman using online calendar to track insurance grace period
woman using online calendar to track insurance grace period
Find out what happens to your coverage, claims and reimbursements during the grace period.
Last update: 21st June 2023

At Alea, we strongly recommend that you do not rely on grace periods for paying your insurance premiums.

A grace period safeguards your original policy date and ensures that you will not lose your insurance coverage in case your premium payment is late. Read on to find out what happens to your coverage, claims and reimbursements during the grace period – and why it is so critical to pay your premiums on time.

What is a grace period?

A grace period is a set length of time, starting from the payment due date, during which the insurer tolerates the non-payment of the premium. During the grace period, you can make a late payment to the insurer while avoiding a penalty and maintaining active coverage. Any payment made within the grace period is considered paid on time.

With some health insurers, you or your broker may need to specially apply for a grace period. Here are some example scenarios:

  • You intend to renew your policy but can only pay at a later date
  • Your broker cannot get in touch with you
  • You have not yet decided if you would like to renew your policy, so you would like to be granted an extension to deliberate

Note, however, that the grace period does not apply to your policy’s initial premium.

At Alea, we do not encourage paying during the grace period because doing so might jeopardize your coverage in case of an emergency.

How long is a grace period?

The length of a grace period varies per insurer. Most health insurance companies have a grace period of 21 to 30 days, while most life insurance providers have a grace period of 30 to 90 days.

To find out the specific grace period for your policy, it’s best to check the terms and conditions in your policy documentation or contact your insurance broker or provider.

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What happens if I pay during the grace period?

If you make your payment during the grace period, then your coverage will stay active.

Although you will still be covered, any claims you make during the grace period will not be reimbursed until the premiums are paid. Whether you pay your premium by credit card, bank transfer or cheque, the insurer will start processing your claims (if any) from the date the premium is received, but they won’t release the reimbursement funds until the payment is reflected in their accounts.

Risks of paying during the grace period

While the grace period can be helpful under certain circumstances, relying on it comes with risks:

  • If during the grace period you discover you have a medical condition, then the insurer could potentially decline cover.
  • If you regularly make late payments, then your insurer may raise a warning.

Your safest bet is to make your payments on time.

What happens if I miss the grace period?

If you fail to make a payment during the grace period, then your insurer will determine whether to reinstate your policy on the terms that were agreed upon.

If your insurer agrees to reinstate your existing policy, they might ask you to sign a health declaration stating that no medical issues arose during the grace period. The health declaration usually only follows if you just crossed the grace period and the insurer granted you, a loyal client, an ex gratia to continue your coverage.

If your insurer does not agree to reinstate your existing policy, then your policy would lapse. To get coverage again, you would need to initiate a new application with a fresh health declaration, exposing you to risks such as the exclusion of pre-existing conditions or premium-loading.

All this said, if you have questions about the grace period in your insurance policy, it’s best to talk to your broker or a representative from your insurance provider.

In order to safeguard your coverage, it’s best to pay your insurance premiums by their due date.


What is a typical grace period?

Grace periods vary in length depending on the insurer. In general, the grace period for health insurance is 21 to 30 days. For life insurance, it’s 30 to 90 days. Check with your broker or provider to confirm the grace period for your specific policy.

How does a grace period work?

A grace period works by ensuring your insurance coverage remains active even if your payment is late (but still made within the grace period). Although the grace period is there to protect you from losing coverage, we at Alea strongly advise that you pay your premiums on time to avoid any unexpected problems.

What is an example of a grace period?

Let’s say you cannot pay your insurance period by the due date of April 5. Your insurer has given you a grace period of twenty days, so you have until April 25 to make your payment. During this time, your coverage will remain active, but any claims you make will not be reimbursed to you until the payment is made.

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This article was independently written by Alea and is not sponsored. It is informative only and not intended to be a substitute for professional advice and should never be relied upon for specific advice.