What is Policy Lapse?

Life insurance is an important tool for protecting your family and loved ones against the risk of your death. If you purchase a policy with a certain coverage plan and pay regular premiums, then you are tension-free about your family's financial safety.

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Suppose Rakesh, a 30-year-old man, bought a life insurance policy and opted for monthly premium payment mode. He regularly paid his premiums for the first few years, but during a period of frequent travel and banking issues, he missed one month of premium payment.

Although his insurer offered a 15-day grace period to make up for the missed premium, Rakesh was unable to pay within that time. As a result, his policy lapsed, meaning he lost all the benefits of the policy. This lapse meant that if something were to happen to Rakesh, his family would not receive the death benefit that was initially promised. This highlights the importance of regularly paying your premium to maintain coverage.

What does a Life Insurance Policy Lapse mean?

Policy lapse refers to the situation in which you can no longer avail the benefits of your policy and the covered provided by it. Once your life insurance policy lapses, you also lose the right to make a claim against it. In other words, the policy lapse occurs when a life insurance plan expires without being converted or renewed to another type of policy. The lapsed plan will not pay the death benefit in case of your unfortunate death.

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What Causes a Policy Lapse?

Policy lapse, in most cases, occurs due to nonpayment of premiums. There can be a number of reasons that can result in the non-payment of your premiums such as travel, problems with your bank account, etc. Insurance companies often recognise these and don't terminate your policy immediately when you fail to pay your premium. The insurers often provide a grace period for which the policy's benefits remain active.

The grace period is often 30 days after the premium due date. If one pays the premium within this grace period, then the policy's benefits and coverage continue. However, in case of non-payment, the insurance company has the right to terminate the policy.

In ‘no lapse insurance’: Opting for a one-time premium insurance plan can help mitigate the occurrence of a policy lapse. Just pay your premium once, and you'll be stress-free in such a case if a policy lapses.

Is it Possible to Revive A Lapsed Policy?

Different term insurance plans have different policies for reinstating a policy that has been lapsed. However, based on your payment history and the nature of the plan, most insurance companies levy an interest on the unpaid premiums before restarting a lapsed policy. Once the unpaid premiums and interests have been paid, the policy will be restarted, and the policyholder and the beneficiaries can continue to enjoy its benefits.

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How To Revive a Lapsed Life Insurance Policy?

One of the first things to do is to contact your life insurer and let them know that want to revive your policy. Then, you are requested to submit a written request and also required to submit good health proof. After submitting your request, the life insurer will review the document and if they can revive your plan. Here are some of the steps which are followed for the purpose of reinstating the lapsed policies:

Step 1: Contact your life insurer

Step 2: Review your policy documents

Step 3: Determine if you are required to submit a request through a written application

Step 4: Pay the over-due premiums

Step 5: Pay your premiums on time.

How to Avoid a Policy Lapse?

Purchase a ‘No lapse insurance’: Opting for a one time premium insurance plan can help mitigate the occurrence of a policy lapse. Just pay your premium once and be stress free.

Choosing auto-payment feature: This ensures a steady payment schedule. Depending on your budget and suitability, it can be set up monthly, quarterly, or annually.

Wrapping It Up!

You must be careful before choosing a policy whether they will be able to pay the premiums it demands. Non-payment of premiums can lead to policy lapse, which can terminate your policy's benefits and coverage.

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

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FAQs

Q: What is policy lapse?

Ans: Policy lapse refers to the situation in which you can no longer avail the benefits of your policy and the covered provided by it.
Q: Why does a policy lapse happen?

Ans: Policy lapse, in most cases, occurs due to nonpayment of premiums. There can be a number of reasons that can result in the non-payment of your premiums.
Q: What is no lapse insurance?

Ans: A one-time premium insurance plan is a no lapse insurance and can help mitigate the occurrence of a policy lapse. Just pay your premium once, and you'll be stress-free in such a case if a policy lapses.
Q: How to Avoid a Policy Lapse?

Ans: Policy lapse can be avoided by opting for a no lapse insurance policy by paying a one time premium. An auto debit feature can also help avoid a policy lapse.

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˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

+On the basis of your profile

+Rs. 410/month 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 30 years of age, rounded off to nearest 10

+Rs. 410/month (Rs.14/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 30 years of age rounded off to nearest 10

+Rs. 245 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10

+Rs. 15/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10

+Rs. 504/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 494/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 636/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 918/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,286/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 453/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs.582/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 30 years of age.

+Rs. 786/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,374/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 30 years of age.

+Rs. 1,592/month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 525/month is the starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 68 years of age.

+Rs. 668/month is starting price for a 2 crore term life insurance for an 25 year-old male, non-smoker, with no pre-existing diseases, cover upto 45 years of age.

+Rs. 1,200/month is starting price for a 2 crore term life insurance for an 35 year-old male, non-smoker, with no pre-existing diseases, cover upto 55 years of age.

+Rs. 410/month is starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 577/month is starting price for a 1 crore term life insurance for an 18 year-old Male, self employed, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. ₹361/month is the starting price for a ₹1 crore loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10

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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Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.

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