Did you leave your life insurance policy halfway? Here’s how to revive it


Insurance is a long-term commitment. Yet few are able to continue it to the end. The reasons for termination of the policy can be many, ranging from lack of funds to poor sale of the product. Whatever the reason for the termination of the policy, the one who suffers is an insured due to the high surrender costs, especially in the case of capitalization policies, and the procedural hassles of reviving the old scheme.

That said, it is always advantageous to relaunch an old plan because an insured has already paid premiums in the past and leaving it halfway means losing its benefits. Additionally, the new policy could become more costly due to age and deteriorating health conditions.

“Life insurance facilitates long-term savings and the benefits multiply over time. This means that in the first year a relatively smaller part of the premium is invested compared to later years – where the entire premium can be part of the investment part. Therefore, in most cases, it is advisable to relaunch the old plan rather than buying a new policy. Also, buying a new policy would mean new underwriting and the premium amount might be higher considering your advanced age,” says Rushabh Gandhi, Deputy Managing Director at IndiaFirst Life.

Rakesh Goyal, Director of Probus Insurance Broker, explains: “When a person takes out an insurance policy, they have to pay a certain amount of premium each year until the policy expires. If for any reason they are unable to pay the premium due on time or within the grace period provided by the insurer, the policy lapses. However, there is an option to restore your outdated font and reactivate it.

The standard procedure is to pay the due amount of premium and interest as well as the penalty imposed by the insurance company. The insurance company may also charge medical costs in the event of a new medical examination by the insured.

“If the policyholder asks to relaunch your policy within six months from the date it expired, they can contact the insurance company and refund the overdue premiums plus interest and relaunch the policy” , Goyal said.

What happens if the policy has been expired for more than 6 months?

“If more than six months have elapsed from the expiry date of the policy, the policyholder must pay the overdue premiums, together with interest at a rate between 12 and 18% of the premium amount. The penalty is also imposed depending on the standards of the insurer, the expiration time of the policy and the type of policy,” Goyal added.

Gandhi further explains: “In some cases, where there is a significant drop in premiums, there might be a case for canceling the previous policy and buying a new one. But these cases are rare and distant from each other.

In addition, in the event of a contract lapsed for more than six months, the resumption of the life insurance contract is at the discretion of the insurer. The life insurance company can modify the original terms and conditions of the policy, increase the premium or request a medical certificate.

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