Exemptions to the Individual Mandate
There are some cases where there is no penalty to not having coverage.
You have a grace period of at least 30 days after the due date of any premium. This means your policy will remain in force during that period.
If you pay your premium within this period, the protection continues.
If you have elected an “automatic premium loan provision” (see below) in your policy, your cash value will be used to continue your coverage. It will continue until either you resume premiums or until all cash value is used.
Companies also have provisions for reinstating policies. They do this when the policy lapses due to nonpayment of premiums.
Generally, they call for presentation of evidence of insurability and for payment of back premiums (with interest).
This option is available to you if you decide to surrender your policy for its cash value.
Companies may delay disbursement of the cash for a period of no more than six months.
Some companies offer you the option of automatically paying any overdue premium. They offer a policy loan to automatically cover you. That way you don’t end up without coverage.
The advantage of an automatic premium loan is that the policy and riders are kept in force even though you fail to pay the premium. (As long as there is enough cash value.)
Remember, that if you continue to pay premiums by this method, then you risk having your policy lapse when the cash value is used up.
Note that the proceeds payable upon surrender or death of the insured will be reduced by any outstanding loan balance.
This article is published on KansasMoney.gov. Find more information by contacting these state agencies: