Manoj Vashisht was living with his wife and two sons in Bangalore. A couple of months ago he met with a tragic accident and lost his life. Ever since then his family is taking rounds of the insurance company to claim the sum assured. Manoj paid the premiums for his term insurance policy for many years; however, upon his demise, the insurance provider told his wife that the last premium was not paid. Therefore, the policy has lapsed and the nominees cannot claim the settlement. Manoj’s family was already trying to cope with the loss of their family member and now the lapse of the term insurance policy has even devastated them.
This has not only happened to Manoj’s family but many of the Indians who have to deal with the unforeseen circumstances of their life without the support of their insurance policy. Once the life insurance, health insurance, or motor insurance policies lapse, the premiums that have been paid to date can be a total loss. The families, therefore, go through a lot of financial hardships due to the loss of assets, livelihood, savings due to medical expenses, or even the life of their loved ones.
Nevertheless, if any of your insurance policy, whether health insurance, motor insurance, or life insurance policy has lapsed, there are certainly ways for the revival of a lapsed policy.
Steps to Renew your lapsed Life, Health, and Motor Insurance Policies
Term Life Insurance Policy
As you purchase a term life insurance policy, you will get the option of paying the premium monthly, quarterly, half-yearly, or yearly. You can choose from any of the available options as per your preference. If you stop paying the premiums of the term life insurance policy, it will become inactive but will not lapse right away. You will get a grace period of 15 days if you pay the premiums monthly. If the premiums are paid on a quarterly, half-yearly, or yearly basis, the grace period will be of 30 days. If you do not pay the premium of the life insurance plan even in the grace period and make no payment for the renewal, the policy will lapse.
According to the guidelines of the insurance regulator, for the policies issued after December 2019, the maximum renewal period is 5 years. On the other hand, the policies that were issued before December 2019, the revival period is 2 years. As the procedure of insurance renewal is concerned, the policyholder has to clear all the outstanding premiums which include the date of the first unpaid premium to the date of revival. The policyholder also has to pay the interest on the outstanding premiums as well as taxes and levies that are applicable. Some insurance companies even may ask the policyholders to undergo a medical test during the revival of the policy.
Health Insurance Policy
The effect of lapsation is the worst in the case of health insurance plans. As you stop paying the premiums of the policy and renew the lapsed policy, again the waiting period for pre-existing ailments will apply to you. You will even lose out on the no-claim bonus that you may have accumulated so far. The healthcare grace period is 30 days within which you can renew the policy. If you cannot renew the health insurance policy even during the grace period, you cannot revive it ever.
Motor Insurance Policy
The lapsed motor insurance policy can also be renewed by the policyholder so that they can continue enjoying the cover and various benefits offered by the policy. This included the no claim bonus that can make up to 65% of the own-damage premium for an average-sized vehicle the amount can go in thousands. The renewal process includes contacting your insurance provider within 90 days period of policy lapse, either directly or through an intermediary. The policyholders can also avail the feature of self-inspection video offered by many insurers in the light of the COVID 19 pandemic. The policyholders uploads videos and photos of the vehicle on the insurer’s app skipping middlemen and completing the entire renewal process within a few hours.