Term insurance plans have been introduced in India with the sole motive of the financial protection of your loved ones. Many of you might buy term insurance to safeguard the future of your family financially in your absence. Term insurance plans provide life coverage to help your entire family to stay financially fit after your demise. However, you should pay premiums regularly to ensure the security of your family members.
Premiums are an inevitable part of every term insurance plan. When you buy term insurance, your insurance company charges you with a specific proportion of money in return for the coverage. As a policyholder, you choose to pay the premium based on your convenience. Usually, you can pay the premiums quarterly, monthly, half-yearly, and yearly. However, when you don’t pay these premiums within the selected time, your life coverage can be ceased, which can lead to the lapse of the term policy.
Before you decide to buy term insurance, you should know everything about a lapsed term insurance policy. Therefore, let’s understand why a term insurance policy lapses:
As a policyholder, you can be eligible to receive life coverage after the payment of premiums on time. The timely payment of premiums can ensure that your term policy remains active. However, there might be a time when you are unable to pay the premium due to loss of income or physical disability. During such a situation, your insurance company can offer a grace period of 30 days. When you receive the grace period, you should ensure you repay the premiums within the stipulated period. If you are unable to make the payment even during those 30 days, your term policy would be terminated.
After your term policy lapses, you would no longer be eligible to reap the term insurance benefits. If you still wish to obtain coverage, you can renew your term policy. Therefore, let’s take a look below to understand how to renew your lapsed term insurance plan:
- Many insurance providers can allow you to revive your term policy at a given time based on specific conditions. However, these conditions can depend on the lapse period of your term insurance policy.
- If you renew your term plan within 6 months of the lapse period, the restoration period can be simple.
- Revival after the 6 months of the policy lapse can mean the completion of the following formalities like payment of the overdue premium, accrued interest, and hefty penalties. Moreover, you might have to undergo medical tests again.
- If anything happens to you within the two years of revival, your insurer can formally investigate before they pay the death benefit to your beneficiaries.
- If you commit suicide, the insurance claim raised by your nominees can be rejected.
Typically, you wouldn’t be liable to receive term insurance benefits after the policy lapse. However, you might wonder if you can file a claim after the lapse. As a policyholder, you can claim under the following circumstances mentioned below:
- If you stop the premium payment within three years from the date your insurer issues the term policy, your family would not receive death benefits.
- If you stop the premium payment after three years from the date of the issue, your insurer might provide death benefit after the deduction of the unpaid premium amount.
As highlighted above, term insurance plans can protect your loved ones from the uncertainties of life. Therefore, you should select the right type of term plan based on the financial needs of your family. Once you choose a suitable term plan for your family members, the regular payment of premiums can ensure their financial security over a long time.