When you stop paying the premium amount of your term policy with-in due date, your term insurance policy lapses. Upon the lapse of the policy, benefits associated with it also become null and void. After the policy lapses, its benefits would not be provided to your dependents in case of premature death of the policyholder and leave your family in the whirl of financial troubles.
However, if you have a caring attitude towards your family, you will want to ensure their financial protection after your untimely demise and for this, you need to keep your term plan active by paying premiums regularly. The procedure for policy revival depends on the company and the policy that you choose. A lapsed insurance term policy is typically allowed within a specific time period and is subject to revival on the insurer’s decision.
Types of Policy Revival
Here are some basic types of revival for your term insurance plan.
If the policy revival is effected within the six months from the date of first unpaid premium, no health check-up is asked by the term policy company and your term plan is revived just by paying the pending premium amount plus the interest.
Revival on non-medical basis
In order to avail revival of your term policy on non-medical basis, the sum assured should not surpass the specific limit for non-medical assurance by your insurer. There is a sum assured band where low sum assured range term plans revival will be on the non medical basis.
Revival on medical basis
High value sum assured term plans will be revived by undergoing medical check ups again. In such cases, your term policy can be revived after medical checkups, if it can’t be revived under ordinary revival or non medical basis. The medical requirements asked by your insurance company will depend upon the sum assured you want to revive.
How can you revive a lapsed term insurance?
The sole purpose of buying one of the best Term insurance plans in India is to provide financial protection for the family when you are not there to support them. Your paid premiums in term plan insurance go in vain when it lapses due to non-payment of premiums in stipulated time period. When you choose for policy revival, it’s a fresh contract between you and your insurer. The insurance company may impose new terms and conditions during the revival.
Listed below are the phases which are vital to help you revive your policy.
The grace period is a period of time after the premium due date during which a policyholder can pay the premiums and this period does not carry the risk of losing coverage. Usually, 15 days grace period for monthly premium payment mode and 30 days grace period for quarterly, half-yearly, and annually premium payment mode is provided to pay the pending premium amount.
This grace period provides you the option to pay your term policy premium. During this period, all the policy benefits including riders taken remain valid and applicable.
If you have missed the premium payment, even during the grace period, the policy will lapse. After the lapse of the policy, an insurer is not liable to pay the death claim in case the policyholder dies during that period.
After policy lapse, you have the option to revive your policy.
The reinstatement period comes after the grace period. The benefits mentioned under the policy, however, don’t remain valid during this period, but insurers provide an opportunity to revive your policy during reinstatement period. The option to reinstate a term policy is not guaranteed under law, so this feature may vary from one insurance company to another. The entire process and documentation procedure for policy revival vary from one insurer to another.
How to Reinstate a Policy Reinstate a Policy
Contact your insurer and ask about the payment due for reinstating the policy. Inquire them the process to reinstate.
Complete all the paperwork honestly, and make the premium payment to your insurance company.
After reinstating the policy, makes sure all the premium amount are paid with-in a stipulated time to avert the policy from lapsing.
Note:The premium rate while reinstating your policy may differ from the one that was earlier defined to you during the purchase of the policy.Source: http://www.suggestinsurance.com/blogs/reviving-a-lapsed-term-insurance-policy/