A term insurance plan is a type of life insurance policy that provides financial protection to the policyholder’s family in the event of the policyholder’s death during the policy term. Term insurance plans provide a high level of coverage at an affordable price.
However, if the policyholder fails to pay the premiums on a life insurance plan, including a term plan, the policy can lapse, which means it is no longer in effect.
If you have a lapsed term life insurance plan in India, there are a few steps you can take to revive it.
Revival Of A Term Insurance Plan
Insurers provide revival options for lapsed-term insurance policies because they understand that policyholders may have circumstances that prevent them from paying their premiums on time. These circumstances could include financial hardship, illness, or simply forgetting to pay the premium.
Revival Process – The policyholders can revive the insurance lapse by applying for the same online at the respective insurer’s official website and paying the necessary charges or visiting the nearest branch office.
Revival charges – Policyholders can revive their term insurance plans by paying the previous premiums that were missed and payable and additional charges if any. The additional charges are the penalty that the insurer might levy for the non-payment of the premium.
The penalty and the revival process are specific to the different insurance providers. For example, there can be changes in the pre-existing conditions causing a lapse in coverage.
Therefore, the policyholders need to understand the lapse insurance meaning, terms and conditions, revival options, and applicable costs before purchasing the term life insurance plan.
Revival period – The insurers will have a revival period for paying the lapsed term insurance policy premiums. Generally, if the policyholder revives the policy within 6 months, the procedure is simple, and the penalty is minimal. However, if it is revived after six months, the overdue payments will have to be paid along with the interests fixed by the insurer.
Based on the insurance provider’s terms and conditions, if the policy cannot be revived, policyholders may need to consider alternative options, such as purchasing a new term insurance policy or exploring other types of life insurance coverage.
Preventing The Term Insurance From Being Lapsed
Although a process exists to revive the term insurance plan, it is available at an additional cost. Therefore, it is important to prevent insurance policy lapses. Here are a few steps that can benefit you in this aspect.
- Pay premiums on time – One of the most effective ways to prevent your life insurance policy from lapsing is to pay your premiums on time. Set up automatic payments or reminders so that you remember to pay your premiums.
- Grace period – A grace period is a specified amount of time a policyholder can pay a late premium on a term insurance policy without the policy lapsing. Most term insurance policies come with a grace period of 30 to 31 days, during which the policyholder can pay the premium and keep the policy in force. If the policyholder does not pay the premium within the grace period, the policy will lapse, which means it is no longer in effect.
- Keep your contact information up to date – Ensure that the insurance company has your current contact information, including your mailing address and phone number. It will ensure that you receive important communications from the company, including premium notices and policy updates.
By offering a grace period and the option to revive a lapsed policy, insurers give policyholders a chance to get their policy back in force and continue receiving the coverage they need.
Conclusion
Reviving a lapsed life insurance policy in India is typically a straightforward process. To revive a lapsed term insurance plan, policyholders should contact the insurance company, pay outstanding premiums and penalty charges, and submit any required documentation.
While there are options to revive the lapsed term policy, it is available at an additional cost. Therefore, the policyholders need to use the options and ensure ways to prevent the term policy from lapsing.