Revival Of Lapsed Life Insurance Policy

Life insurance guarantees^* financial protection in case of unexpected events but keeping it active requires timely premium payments. However, with life’s busy schedule, if you do miss a payment, you have a grace period of 15-30 days, depending on your policy. And unfortunately, if you still cannot pay your premiums, your policy may lapse, leaving you without coverage.

But here's the good news – even if your policy lapses, you have a chance to revive it within a specific time frame after the grace period ends. This process gives you another shot at securing your loved ones' financial future. Understanding how to revive a lapsed life insurance policy is essential for ensuring your family's financial security. So, let's dive in and learn more about how to keep your coverage intact.

When Does An Insurance Policy Lapse?

An insurance policy usually lapses when you miss paying the required premiums within the grace period. This period typically lasts 15 days for monthly payments and 30 days for other payment schedules. If you don't catch up on payments during this time, the policy terminates.

Once the policy lapses, you lose your coverage, and the insurer is not obliged to pay out any benefits. To avoid this situation, it is important to know your premium payment responsibilities and understand the terms of your life insurance policy for uninterrupted coverage.

Please note that the grace period may vary from insurer to insurer, so make sure you check your plan thoroughly.

What Happens When Life Insurance Lapses?

When your life insurance policy lapses, it indicates you have missed paying premiums within the grace period set by the insurer. As discussed above, the immediate consequence is the loss of coverage, meaning the insurance company is no longer obligated to pay out the policy benefits.

Yet, you get a chance to revive the policy within a specific time frame. This typically involves settling overdue premiums (possibly with interest) and fulfilling specific conditions outlined by the insurer.

What Is The Revival Of Life Insurance Policy?

When you miss paying the renewal premium for your life insurance policy, causing the policy to lapse. This happens if you miss both the due date and the grace period given by the insurance company. However, there is a solution that can help you get your policy back on track called the revival period.

The revival period is the timeframe the insurer allows for you to bring back a lapsed policy. It is your chance to reinstate the term policy and regain its benefits. This period typically lasts 2, 3, or 5 years from the date of the first missed premium, but this duration may vary between insurers.

Keep in mind, once the revival period ends, you cannot reactivate the policy, even if you want to catch up on all the overdue premiums. So, it is crucial to act within the revival period to ensure your life insurance remains active and provides the coverage you need.

Reinstating your policy may come as a good option, but it comes with a catch! It is important to understand why relying on the revival period should be your last resort. When a policy lapses, you can only recuperate it back during the revival period. This window of opportunity is open only for a definite duration.

Unlike the grace period, which maintains your coverage even if you miss a payment, the revival period offers no protection. This means that if something unfortunate happens during this time, your nominee cannot make any claims. You should also know that the longer your policy stays lapsed, the more complicated it may become to revive. It indicates that you might need to undergo new medical tests, handle more paperwork, and face additional charges if your risk profile has increased.

What Is The Revival Period In Insurance?

The revival period in insurance, as discussed above, is a specific time frame during which you can reinstate a lapsed policy. This situation arises when you miss paying premiums within the grace period, causing the policy to lapse.

Different insurers may have varying durations for the revival period, but it generally spans a few years following the policy lapse. During this time, you have the chance to reinstate your policy and get back on track. It is like a second opportunity to ensure your coverage does not slip away permanently.

How To Revive Lapsed Life Insurance Policy?

• Contact Your Insurance Provider:
  The first step in the revival process is to contact your insurance provider. They can guide you through the necessary steps and inform you about any specific requirements.

  
  

• Pay Outstanding Premiums:
  You will need to pay all the outstanding premiums that have accrued since the policy lapsed. This also includes any interest charged by the insurer.

• Undergo A Medical Examination:
  Depending on the duration of the lapse and the policyholder's age, a fresh medical examination may be required. This is to assess the policyholder's current health status.

• Submit A Revival Application:
  An application for revival stating the reasons for the non-payment of premiums must be submitted to the insurer. The insurer will review the application and decide on the revival.

• Policy Revival:
  If the application is approved, the policy is revived and comes back into force, restoring the insurance coverage.

While the process of reviving a lapsed life insurance policy may seem daunting, it is crucial to ensure that the financial safety net for your loved ones remains in place. Always remember to pay your insurance premiums on time to avoid the hassles associated with policy revival.

What Are The Benefits Of Reinstatement Of Lapsed Life Insurance Policy?

Reinstating a lapsed life insurance policy offers several important benefits. These include –

• Financial Protection For Your Family
  If you have loved ones who financially rely on your earnings or if you have any outstanding debts, keeping your insurance coverage intact is crucial. By reinstating your policy, you ensure that your family will receive financial support if something happens to you during the policy term. The death benefit can help them cope financially with the loss of income and maintain their standard of living.

• Retain Accumulated Benefits
  If your life insurance includes an investment component like in Unit Linked Insurance Plans (ULIPs), reinstating your policy allows you to keep the accumulated fund value. This preserves your investment gains and can contribute to higher overall returns over time.

• Get Maturity Benefit
  Some life insurance policies will provide a lump sum payment when the policy matures. By reinstating your lapsed policy and catching up on missed premiums, you can ensure you receive this maturity benefit in the future.

• Cost Savings
  Reinstating a lapsed policy might be cheaper than buying a new one, especially if your health has worsened since you first took out the policy. This way, you can secure coverage without paying higher premiums due to changes in your health status.

How To Avoid Policy Lapse In Life Insurance?

To prevent your life insurance policy from lapsing due to missed premium payments, consider these simple tips –

1️. Make Use Of Technology
Take advantage of technology to help you remember payment due dates. Set reminders on your mobile/laptop calendar or use smartphone apps to keep track of deadlines.

2️.Opt For Automatic Payments
Consider setting up automatic payments directly from your bank account. Using a bank account for standing instructions is preferable over using a credit or debit card, as cards can expire and disrupt payments.

3️.Explore e-NACH
If your bank account is linked to your Aadhaar, you can opt for e-NACH, a convenient online process for setting up recurring payments. This ensures that your premiums are deducted from your bank account automatically, reducing the risk of missing payments.

4️.Enable Electronic Notifications
Many insurance companies offer email or text alerts to remind you of upcoming premium due dates. By enabling these notifications, you'll receive timely reminders to ensure you don't miss any payments.

5️.Keep Your Contact Information Updated
Make sure your insurance company has your current contact details, including your email, phone number, residential address, etc. This ensures you receive premium reminder letters, emails, or text messages promptly. If there are any changes to your contact information, be sure to update it with your insurer to continue receiving timely reminders.

6️.Choose A Plan Within Your Budget
When selecting a life insurance plan, opt for one with a premium that aligns with your financial capabilities. Since life insurance is a long-term commitment, it's essential to estimate your future premium-paying capacity, especially considering possible events like job loss, marriage, etc. Assess your financial situation and select a premium frequency and mode that suits you best.

7️.Explore Payment Frequency Options
Some insurance companies offer flexibility in premium payment frequencies. Consider options such as annual or semi-annual payments, which may be more manageable than monthly payments. This way, you can ensure consistent premium payments without straining your budget.

8️.Review Your Finances Regularly
Periodically assess your financial situation to make sure you can still afford the premiums. If necessary, consider exploring alternative options to suit your budget better.

9️.Create An Emergency Fund
Set up an emergency fund specifically earmarked for insurance premiums. This fund can help provide a financial cushion during unexpected events, ensuring you can continue to pay premiums even if you face financial challenges.

To conclude,

Reviving a lapsed life insurance policy offers a second chance at financial security for you and your loved ones. By reinstating the policy, you regain coverage and assure protection for your family from financial hardships. It is a valuable opportunity to safeguard your future and provide peace of mind. Remember, while the process may involve some effort, the benefits far outweigh the challenges. So, if you find yourself in a situation where your policy has lapsed, do not hesitate to explore the possibility of revival - it could make all the difference in the years to come.