If you have a term insurance policy, you must regularly pay the premiums on time to remain protected. If you’ve missed out paying the premium somewhere in the tenure even after the grace period, then your policy will get lapsed, which means you or your loved ones will no longer be protected with an insurance policy. In the case of term insurance policy, your family will not receive any sum assured after your demise. Therefore, it is important that you keep the policy active at all times.
What does term insurance policy lapse mean?
A Policy lapses when it is no longer active. Typically, it happens when the customer does not even pay the premium even after the grace period. A Lapsed state means it has not acquired a surrender value. Naturally, all the money poured in the form of premium towards the policy would be lost.
What happens to Lapsed Insurance Policies?
If you allow your policy to lapse, then your policy will be cancelled. It means you lose coverage and cannot make any claim whatsoever. In some cases, the lapsed policy may be reinstated upon the payment of premium. However, it depends on the company. Some Insurance companies do not reinstate lapsed policies. Even if it is reinstated, the coverage amount will be reduced and you may end up paying a higher premium. You may have to pay a hefty penalty for the missed amount and you may only avail the standard benefits offered under the policy
How to revive a Lapsed Term Insurance policy?
There is a possibility to revive a lapsed insurance policy, which is of course at the discretion of the insurance company. The first thing you must do after you get to know that your term insurance policy has been lapsed is to contact the insurance company asking them to reinstate your policy. They would want you to place a written request and also submit a proof that you are of good health.
Once your letter and reports are received, the insurance company will then review your case and take a call whether to reinstate your policy. Mentioned below is the procedure to be followed to revive a lapsed term insurance policy
Step 1: Contact your Life Insurance Company.
Step 2: Review your policy documents
Step 3: Place a written request asking for a reinstatement
Step 4: Pay your overdue premiums
Step 5: Start paying current premiums on time
How can you avoid Policy Lapse?
The only way to avoid term insurance policy lapse is to pay premium on time. Most insurance companies send reminders about premiums with a payment link in the form of SMS or email, following the link, you can easily renew your term insurance policy in few steps. You can follow the simple ways below to ensure your policy does not lapse
- Buy a single-premium policy that requires one single upfront payment. For such policies, there are no follow-up premiums every year. This removes the chances of policy lapsing.
- Opt for an auto-debit from your savings account. It ensures an uninterrupted flow of money from your account on time towards the premium
- Set reminders early if you have not opted for auto-debit
- Opting for SMS/Email reminders from the insurance company would keep you alert about the payment due date
Conclusion
Maintaining a continuous coverage is important as it keeps you protected at all times. It is important to pay your premiums on time, to escape from hefty penalties. Customers have to be informed that not every lapsed policy can be reinstated. It’s always better to be safe than sorry. India’s best Insurance aggregator site Fincover.com, can help you renew your term insurance policy online in just few steps.
