Step To Renew Your Life Insurance Policy
Published On Oct 07, 2021
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A lapsed policy means that you and your dependents are exposed to risk that an unforeseen event may bring. Since you are not entitled to any cover benefit after the policy lapse, it beats the very purpose of availing life insurance. You can, however, revive your life insurance policy and reinstate the benefits that you and your nominees are entitled to. 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.
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. You would have to pay the unpaid premiums (along with interest accrued in the policy lapse period).
How To Renew a Lapsed Life Insurance Policy?
The steps involved to revive a lapsed life insurance policy are stated as below:
Contact The Life Insurance Company
The first step towards revival is to contact the insurance provider. Inform them of your decision to revive the life insurance policy and fill in the requisite documents to proceed further. During this step, you will be informed of the revival quote or amount that you would need to pay. The applicable amount will include all the premiums due on the insurance policy.
Pay The Outstanding Premium Amounts
As a thumb rule, the grace period offered by life insurance companies is 30 days. If you pay the outstanding dues during this period, you are most likely not required to pay any penalties. If you make the payment later than the grace period, but lesser than six months, you have to pay the outstanding premiums, along with interest incurred on them, to revive your insurance policy lapse. If the payment is made post six months, then along with the interest and premiums; you would most likely be liable to pay a late fee or penalty. This penalty is often termed as the revival penalty.
The life insurance policy premium is primarily determined by one’s health and age. Post an insurance policy lapse, you may have to provide a declaration of good health. If the insurance policy is revived within six months, you would most likely not be subjected to any medical tests. However, if the same occurs post six months, you may have to undergo a health check-up at your own expense. At times, you may be mandated by the insurance provider to undergo a check-up if you have a medical history or a pre-existing condition.
There are many options available when you revive a lapsed insurance policy.
- You may follow the above steps for revival.
- You may pay the surrender amount and obtain the fund value of your life insurance policy.
- Alternatively, if you have religiously paid your premiums on time for three years, your insurance policy may not completely die, and you would be eligible for a lower sum assured value.
Life insurance is an important tool to avail in your investment portfolio, as it safeguards the financial future of your family in your absence. Make sure to pay your premiums on time, and even if you miss one, revive your policy to ensure you and your loved ones enjoy continued protection always. Opt for a direct debit facility to ensure that you never miss a due date.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.