What You Ought to Know About Reviving a Lapsed Term Insurance

Term insurance policy lapses when you fail to pay the due premium even during the grace period. As a result, your insurance contract ceases to exist. In such a scenario, if something were to happen to you, the insurer will not offer death benefits to your beneficiaries. So, if you have been careless enough to let your policy lapse, here’s what you can still do to revive it.

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When does a Policy Lapse?

As long as you pay your premium, your policy remains active. If something untoward happens to you during this period, the insurer will honor the commitment and pay your beneficiaries. However, if you stop paying your premium, your life insurance policy will be considered as lapsed and the insurer will no longer be obliged to provide coverage.

Now, even after the policy premium due date, insurers give a grace period during which you can make the payment. This grace period is of 15 days if your premium payment mode is monthly, else it is 30 days. If you fail to pay the premium even during this grace period, your policy will lapse.

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How to Reinstate the Lapsed Policy?

Revival can happen at any time but the conditions for revival might depend upon how long your policy has remained lapsed. As per insurance laws, if the policy has been in force for at least three years, the insured gets two years to revive the policy. If you revive the policy within six months of its lapse, the restoration process is simple. However, if you revive the policy after six months, you may be asked to pay the overdue premium, penalty charges, as well as interest payment that could be 12%-18% of the total premium.

At the time of revival, an insurer might impose restrictions or even decline your request if they are not convinced about the integrity of your application. The insurer can ask you to appear for medical tests to ascertain whether you have developed a new ailment that might expose the former to a high risk in insuring your life. It can reinstate all benefits that you or your nominees are eligible for. However, if you commit suicide within a year of policy revival, the insurer can deny the claim. Similarly, if you die within two years of policy revival, the insurer can conduct an enquiry before paying death benefits to your nominees.

Note: Now that you know that How to Reinstate the Lapsed Policy, you should also get to know about what is term insurance to buy a term plan for your loved ones.

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Can One Get a Claim on Lapsed Policy?

To answer this question let’s look at specific scenarios.

Scenario 1: You stop paying the premium within 3 years from the date of policy purchase

In this situation, the insurer will not pay any death benefit.

Scenario 2: You stop paying the premium after 3 years from the date of policy purchase

The insurance company will pay death benefits to the beneficiary after deducting the unpaid premium.

Life insurance is a necessity that every person with or without dependents should buy. Don’t let your policy lapse, as it can jeopardize the financial security of not just your family but also you.

You may also like to read : Revival Of A Lapsed Life Insurance Policy

Note: Check out the best term insurance plan in India and choose one that suits your requirements.

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.

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Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

+Rs. 487/month (Rs.16/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881

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+Rs. 820/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.

+Rs. 1,443/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.

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