Life can bring months when paying the premium becomes difficult. The policy does not collapse immediately in that case – but it is worth knowing the rules in advance, because more is at stake in the early years.
- For a missed premium, a 30-day grace period applies, set in the insurer's written demand for payment under the Hungarian Civil Code (Ptk.) Section 6:449 (the policy conditions may also allow a longer grace period) – cover typically continues throughout.
- Once enough premium has accumulated, the policy typically reduces automatically to a paid-up basis – continuing with a smaller sum.
- In the early stage, the policy can lapse without any payout; a lapsed policy can typically be reinstated for a period afterwards.
The first step: the grace period
Under the Hungarian Civil Code (Ptk.) Section 6:449, the insurer sets a 30-day grace period for a missed premium in its written demand for payment; the policy conditions may also allow a longer grace period. Cover continues if the missed premium arrives within that window; if it doesn't, the policy – where automatic paid-up reduction isn't available – typically lapses with retroactive effect to the original due date. The best thing to do in this situation is not to wait until the deadline, but to get in touch – the earlier you do, the wider the range of solutions.
The second step: automatic paid-up reduction
If the grace period also passes, what happens to the policy depends on how much premium has already accumulated. With most products, after a certain point, an unpaid premium leads not to a lapse but to automatic paid-up reduction: the policy continues, but the sum insured drops to a lower level set out in the terms, and indexation typically stops. This is a safety net – not an ideal state, but not the end of cover either.
The risk in the early stage
To be honest: in the early years – before the amount of premium set out in the terms has accumulated – an unpaid premium can lead to the policy lapsing with no payout at all. The threshold varies by product (typically the first few years in the market). This is why it matters that the premium is one you can reliably afford from the start – a smaller policy you can pay steadily is better than a larger one that falters in the first difficult month.
Reinstatement: there is a way back
A lapsed or reduced policy can typically be reinstated within a set period by paying the outstanding premiums – typically within a window of a few months in the market, with terms that vary by insurer; in some cases, the insurer may reassess the risk. What to do in practice – who to contact, and in what order – is set out in our article on difficulty paying premiums.
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