Many individuals holding a term life insurance plan find it quite difficult to renew their plan on or before the expiration date. In order to help the life assured retain their policy features and benefits and avoid paying any kind of late renewal payment, the insurers provide a grace period. At the time of demonetization in 2016, various individuals faced an unexpected cash crisis.Read more
+Tax benefit is subject to changes in tax laws.
++All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
In order to improve this scenario, the insurance regulating authorities offered an additional grace time of 30 days for paying the term insurance premium amount and renewing the plan. The term insurance grace period varies depending on the term of premium payment such as monthly, quarterly, half-yearly or annual. Various insurers provide grace periods with different T&Cs such as Max Life Term Insurance grace period for monthly payment frequency is 15 days and 30 days for Annual, half-yearly, and quarterly premium payment frequency. Let’s discuss Max Life Term Insurance in detail:
A grace period is the additional number of days allowed by the insurer to pay the Max Life Term insurance premium rates and renew the term policy. The grace time varies depending on the premium payment method you select. Most insurance providers in India allow two ways of paying a premium:
Single-Premium: In this, you make a one-time payment of premium in a lump sum at the time of purchasing the plan.
Regular Premium: In this, you can pay the premium amounts on annually, bi-yearly, quarterly, and monthly basis as per your requirement.
The below table will help you get a clear picture of the Max Life Term Insurance Grace Period as per the premium payment frequency you select.
|Mode of Premium Payment||Grace Period|
The grace period is generally 15 days for monthly premium payments i.e., called regular payments, and 30 days for longer premium payment options such as half-yearly and yearly. Most insurance companies send reminder messages for the payments of premiums before the due date and then inform the policyholder if the plan has entered into the grace time period.
In case the grace period has passed, it may impact you adversely. If you exceed the grace time, the Max life term insurance will get cancelled and the whole procedure of insurance application will start from the beginning. So it is recommended to make your term insurance payments on time.
In case of not renewing the Max life term insurance plan during the grace time, the plan lapses, and your family members are left without financial protection in case of the policyholder’s demise. A lapsed term plan is a big loss for the policyholder because he/she loses all the premium that is paid and also the insurance coverage.
However, if the life assured dies during the grace time, his/her family is entitled to receive a death payout after the deduction of the premium amount that is not paid.
Most insurers give policy buyers the option to revive their term plan. The T&Cs vary as per the policy guidelines of the company. You may also be required to undergo a medical examination for reviving the plan. Typically, a timeframe of 2 years is required to revive the term plan but the extra money is to be paid in the form of revival fees, costs of medical examinations, and penalty and interest charges.
The policyholder should compare the rates of opting for either of the 2 steps: Purchasing a new term insurance plan or policy revival. If you had purchased the lapsed term plan at 35 years of age and want to purchase a new plan at 45 years, it may cost you extra. If you are also within the permissible 2-year time, the revival costs will be added which involve 2-year premiums, interest, medical tests, and revival fees.
If you are not sure whether to revive the old plan or invest in a new term insurance plan, it is recommended to compare the premium rates and decide accordingly.
In case of the unforeseen death of the life assured during the grace time, the insurance claim registered by the nominee will be provided by the insurer.
Let’s understand this with the help of an example:
A policyholder whose insurance premium due date is on 9th September each year. He forgets or misses to make the premium payment on Sep. 9th in the 5th year of the policy. And, from the very next day, the plan enters the grace period. Then, after 4 days i.e., on 13th Sep. the policyholder suffers a heart attack. The nominee appointed by the policyholder files a claim on Sep 18th. Since the plan is still in the 30 days of grace time and the claim has been made within that time, the insurance company will settle the claim for SA as it would have been in an active plan. The claim settlement will take place as per the policy’s T&Cs.
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