First Unpaid Premium (FUP)
Updated on October 4, 2023
A premium is the regular payment made by a policyholder to their insurance company, typically on a monthly, quarterly, semi-annual, or annual basis. These payments are essential as they maintain the insurance policy’s active status while unpaid premiums result in the lapse of the coverage under the policy. The meaning of the term First Unpaid Premium is given here.
Meaning of First Unpaid Premium
The “first unpaid premium” refers to the initial instance when a policyholder fails to pay the premium by the due date. This happens when the policyholder misses or delays the payment for the first time. When a premium payment is not made on or before the due date, the policyholder’s insurance policy becomes at risk of lapsing or becoming inactive.
What is the FUP Date?
If a policyholder fails to make the premium payment on or before the due date, the date on which the premium was originally due becomes the “Date of First Unpaid Premium” or FUP date. On the FUP date, the policyholder’s insurance policy enters a grace period during which they can make the overdue payment and reinstate their coverage without having to reapply for a new policy. The length of this grace period can vary by insurance company and policy type.
What are the consequences of missing a premium payment?
If the policyholder does not make the overdue payment within the grace period (usually a few weeks or months), the insurance policy may lapse. This means that the policy is no longer in force, and the policyholder loses the insurance coverage. Depending on the terms of the policy and the insurance company’s policies, the policyholder may have the option to reinstate the lapsed policy, but this often involves paying the overdue premiums and potentially other fees or penalties.