How Long Do You Have To Pay Life Insurance Before It Pays Out In Arkansas?

a group discussing life insurance payouts in Arkansas

Life insurance is an essential financial product that provides peace of mind and financial security for your loved ones. Understanding the nuances of how life insurance works, including the duration of premium payments before the policy pays out, is crucial for policyholders.

This blog will delve into the specifics of life insurance in Arkansas, focusing on the factors that influence the payout period and what you need to know to ensure your policy serves its intended purpose.

Types of Life Insurance Policies

Before we discuss the payout period, it’s important to understand the different types of life insurance policies available. There are primarily two kinds of life insurance: term life insurance and permanent life insurance.

  1. Term Life Insurance provides coverage for a set period, typically 10 to 30 years. If the insured person passes away during this time, the policy pays a death benefit to their beneficiaries. If the term expires and the insured is still alive, the policy terminates without any payout, unless it’s renewed or converted to a permanent policy.
  2. Whole life, universal life, and variable life insurance are all permanent life insurance options. These policies do not expire as long as the premiums are paid and they often include a savings or investment component that builds cash value over time. They are made to last for the insured’s whole life.
a person pointing at a life insurance policy form

Initial Coverage and Contestability Period

When you first purchase a life insurance policy in Arkansas or any other state, there is typically a contestability period. This period usually lasts two years from the policy’s start date. During the contestability period, the independent insurance company has the right to investigate and deny claims if there is evidence of fraud, misrepresentation, or omission in the application. If the insured dies within this period, the insurer will thoroughly review the claim before payout.

Grace Periods and Lapsed Policies

Life insurance policies generally come with a grace period, which is the time allowed to pay a missed premium without losing coverage. In Arkansas, the grace period is typically 30 to 31 days. If the policyholder fails to pay the premium within this period, the policy may lapse, meaning the coverage ends, and no benefits will be paid out unless the policy is reinstated. Reinstatement may be possible, but it usually requires paying back premiums and possibly providing evidence of insurability.

Payout Conditions and Exceptions

The payout of a life insurance policy is contingent upon several conditions, which vary depending on the type of policy and the insurer’s terms. Common conditions include:

  1. Payment of Premiums: The policy must be in force at the time of the insured’s death, meaning all due premiums must have been paid up to date.
  2. Cause of Death: Most policies cover all causes of death except for suicide within the first two years of the policy (the contestability period). Certain policies may not cover high-risk activities or pre-existing conditions.
  3. Policy Loans: For permanent life insurance policies, any outstanding loans taken against the policy’s cash value must be repaid. If not, the loan amount plus interest will be deducted from the death benefit.

Special Provisions in Arkansas

Arkansas follows standard regulations common in the insurance industry, but it’s important to note any state-specific provisions that might affect life insurance policies. For instance, Arkansas law mandates certain consumer protections and rights for policyholders, such as:

  • Free Look Period: Arkansas law requires a “free look” period, usually 10 to 30 days, during which a new policyholder can review the policy and cancel it for a full refund if not satisfied.
  • Prompt Payment: Insurers are required by Arkansas law to pay out death benefits promptly, generally within 30 days after receiving a valid claim. If the payout is delayed, the insurance company may be required to pay interest on the death benefit.

How Long Before Life Insurance Pays Out?

Now to the core question: How long do you have to pay life insurance premiums before the policy pays out?

  1. Immediate Coverage: Once the policy is active and the first premium is paid, coverage begins. This means that if the insured dies shortly after the policy is issued and the first premium is paid, the policy will pay out, subject to the contestability period provisions.
  2. Continuous Payment: For the policy to remain in force, continuous premium payments are necessary. Missing payments can lead to lapsing of the policy, making it crucial to stay current with premiums.
  3. Term Life Policies: These policies only require payments for the term selected. If you choose a 20-year term and continue to pay the premiums, the policy will pay out if the insured dies within those 20 years. If the term ends and the insured is still alive, there is no payout.
  4. Permanent Life Policies: These require lifetime payments, although some policies allow for a paid-up status after a certain number of years or once a certain amount of premiums have been paid. For example, a whole-life policy might be designed to be “paid up” after 20 years of premium payments, meaning no further premiums are required, but the coverage continues.


In Arkansas, as in other states, the length of time you need to pay life insurance premiums before the policy pays out depends on the type of policy you have and the terms of that policy. Understanding the specifics of your policy, including the contestability period, grace periods, and any state-specific regulations, is crucial to ensuring that your life insurance provides the intended financial protection for your beneficiaries.

It’s always advisable to thoroughly review your life insurance policy documents and discuss any questions with your insurance agent or life insurance company representative. Keeping your premiums up to date and being aware of the terms and conditions of your policy will ensure that your beneficiaries receive the benefits you intend to provide. In case of any doubts or complex scenarios, consulting with a financial advisor or insurance expert familiar with Arkansas laws can provide additional peace of mind.

Contact G&G Independent Insurance to get a free quote today!