You no longer have the benefit of the financial protection that your life insurance policy offers if it has lapsed. A life insurance policy lapses and also its benefits when you fail to pay the premium within the grace period.
A lapsed policy means that you and your dependents are exposed to the unforeseen risks in life. Since you are not entitled to any cover benefit after the policy lapse, it beats the very purpose of availing life insurance.
Though you can revive your life insurance policy and restore the benefits that you and your nominees are entitled to. The revival of a life insurance policy depends on various factors such as the duration between the date of policy lapse and the date when the request for revival is made, and the type of policy.
Life insurance is a key instrument to avail in your investment portfolio, as it safeguards the financial future of your family in your absence. Ensure to pay your premiums on time, and even if you miss one, revive your policy to ensure you and your loved ones enjoy constant safety always.
An endowment plan, for instance, can be revived if the process is initiated within 2 years from the last due date of the unpaid premium, provided that your life insurance plan is within the policy period. The process of revival of a lapsed life insurance policy is dependent on the time elapsed between the date of policy lapse and date of the request for revival.
If you apply to revive your policy within 6 months from the date it got lapsed, the process is simple. You can contact your insurance company and pay off the overdue premiums along with any interest, and revive your policy. This can be done online also.
If it’s been more than 6 months from the date of policy lapse when you apply for revival, you would have to pay the overdue premiums, along with interest at a rate between 12-18% of the premium amount. The penalty is also levied depending on the insurer’s norms, policy lapse time, and type of policy.
In the second case, the revival of your life insurance policy is at the discretion of your insurer. Your life insurance company may alter the original terms and conditions of the policy, increase the premium, or ask for a health certificate. It may also ask you to go for review medical tests, in order to assess your present health condition.
For that reason, it is prudent and beneficial to revive your policy as soon as possible, to avoid penalties and loss of benefits. Opt for the direct debit facility to ensure that you never miss a due date!