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A life insurance policy lapses if the premium is not paid on the stipulated time. This might impact the nominee’s benefits later. So, it is important to revive a lapsed life insurance policy by following the steps discussed in this post!
A life insurance policy is a way to secure the family members of the policyholder financially in the event of an unfortunate demise of the insured. But do you know that your nominee might lose out on all the life insurance benefits if your policy lapses because of not paying premium on time. So, what can be done to revive a policy in case it expires. Let us discuss the steps required to revive a lapsed term life insurance policy. But before that lets understand what a lapsed policy is and what happens if your life insurance lapses?
Let’s understand it with an example. Suppose you bought a life insurance policy to secure the lives of your family members financially. Now, you continue paying the annual premiums for a specific period of time. However, you missed one premium payment date by mistake. In fact, you even missed the grace period during which you could have revived the policy. So, due to missing the premium, you will now miss all the benefits that the policy was meant to offer. This is called a lapsed policy.
Hence, when a policy lapses because of non-payment of premium beyond the grace period, it is called a policy lapse, which causes the termination of all benefits, coverage etc.
So, it is important to keep a note of the due date of your policy premium by setting reminders. However, if due to any unavoidable circumstances you couldn’t pay the premium on time and the policy lapses, you can revive it by fulfilling certain terms and conditions of the insurer.
Also, to encourage people to revive their lapsed policies, many insurers come up with campaigns so that people could reinstate their lapsed policies. They also extend numerous benefits for policyholders for reviving policies as per the laid conditions.
Now, for policy revival you need to first check the revival period.
From the end of the grace period till about 3 years or so is the time allowed by insurance companies for reinstatement of lapsed life insurance policy. This time duration is mostly written in the policy document along with the required process to follow by the insured to restore the lapsed policy. Hence, you have to make sure that you reinstate the policy during that prescribed period.
If a policyholder wants to restore a lapsed life insurance policy, he/she is required to write an application to the insurer for revival of the policy. You may have to submit a normal revival form as well. Some companies may even ask the insured to go through a medical examination, while some may just ask you to offer a good health declaration. As per the declaration, the person may have to go through some medical tests. You can seek help with the customer care support of the company or may visit a branch to know the process in detail.
Well, if a policyholder wants to revive a lapsed policy, he/she has to pay the due premiums for the number of years for which the premium has not been paid. Further, you may also be required to pay any penalty which has been levied by the insurance company. The penalty levied differs as per the insurance company and the terms and conditions of the policy. The insurer may also increase the premium per year from what you have been paying prior to the policy lapse.
When you revive a policy, the insurer may levy some new clause or impose new terms and conditions. The insured must read the new terms and conditions in the policy document to know the fine print well.
While reviving a lapsed policy, it is important to see the new terms and conditions that are levied by the insurer. This is because if the policy stayed inactive for a long time, the insurer might increase its premium and modify earlier terms and conditions at the time of revival. So, it is important to discuss all such things with the insurer prior to reviving the policy.
Further, it is recommended to revive your life insurance policy at the earliest so that you can continue to avail the benefits under the plan.
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