While a term life insurance policy can be cancelled or lapse when the premiums go unpaid, the policyholder may be better off personally calling his agent to cancel the policy. The policyholder can adjust his level of coverage if need be in order to keep death benefit proceeds.
Some permanent life insurance policies allow the policyholder to use the plan's cash value to pay premiums if it becomes necessary. If too much of the cash value is used to cover premiums, the policy's total cash value could greatly diminish, along with the death benefit. There are also policies that allow the insured individual to adjust the amount he pays for his premiums and even skip premiums altogether every now and then. It's always best that the policyholder check with his agent before adjusting or skipping premium payments
If an individual allows his policy to lapse and decides to get another life insurance policy later on, he may have to pay more in premiums than he did with his original policy. The cost of life insurance premiums increases with a person's age, which is why it's best that the individual talk with his agent before he stops paying premiums, cancels his policy or allows his policy to lapse.