If you have a term insurance policy, you must periodically renew it to keep it active. However, if you fail to pay the premium on or before the due date, your policy will lapse. This means you will not have any cover, and if anything happens to you during the lapsed period, the insurer will decline the claim request filed by the nominee.
If you forgot to renew the policy, all is not lost yet. You can renew the policy by following specific steps. Let us discuss the steps to revive the lapsed term plan.
How to renew the lapsed term insurance policy?
You can revive or renew your term plan anytime at your convenience. However, you must be aware of the revival terms as they vary based on how long your policy has lapsed.
According to insurance laws,if your term insurance policy was active for three years consecutively, you can renew your policy anytime within two years from the date of policy lapse. If you renew the policy within six months, the process is simple. You can pay the balance premium and get the new policy renewed.
But, if you renew the policy after six months, you must pay the overdue premium and the interest on the balance amount. The interest charged could vary from one insurer to the other, but it generally ranges from 12 to 18%.
When you renew term plans after they have lapsed, the insurance company may impose certain restrictions or even decline your renewal request. This usually happens if the insurance company doubts the integrity of your application. Also, when you renew the policy, the insurer may require you to undergo a health check-up to ensure that you have not developed any critical illness that may increase their risk in offering your life cover.
But, if you pass the medical test with flying colours, the insurance company may reinstate all the policy benefits that you are eligible for, and you may get comprehensive coverage as before.
Can you get a claim on the lapsed policy?
The insurance laws in India have laid specific rules for claim settlement on lapsed policy. Let us understand this with two situations.
Your policy lapses within three years of buying the plan due to non-payment of the premium.
In this case, the insurance company will not honour the death claim request. This means if you fail to revive the policy, the nominee will not get any policy benefits.
Your policy lapses after three years from the date when the policy was issued.
In this case, the insurance company will pay the death benefit to the nominee after deducting the unpaid premium amount
A term life insurance policy is a necessity for all. It helps you safeguard the financial future of your family against uncertainties. However, the policy is only helpful if you keep it active. Hence, it is paramount that you pay the premium diligently on or before the due date and don’t let the policy lapse. A lapsed policy can jeopardise your family’s financial future.